The payments landscape in the UK is undergoing a significant transformation, driven by the rise of Open Banking and innovative solutions like Pay by Bank. As consumers and merchants alike seek more efficient, secure, and cost-effective payment methods, this emerging technology is poised to reshape the way we think about retail transactions.
The foundations of Open Banking
Open Banking, which allows third-party providers to access customer account information and initiate payments, has paved the way for the development of products like Acquired.com’s Pay by Bank solution. This account-to-account payment method offers a range of benefits that are particularly appealing to high-average-transaction-value (ATV) merchants, who have historically been burdened by the high costs associated with traditional card payments.
According to recent research by Open Banking Limited (OBL), Open Banking adoption in the UK has now reached over 10 million users, with the potential to grow to the key milestone of 20 million users in the future. As this technology gains traction, Pay by Bank is emerging as a compelling alternative for businesses looking to reduce their payment processing fees and provide a seamless customer experience. This surge in adoption is clearly not just a trend; it represents a fundamental shift in how people are choosing to process payments.
Cost efficiency
One of the key advantages of Pay by Bank is its potential to significantly lower transaction costs for businesses. A study by the Open Banking Implementation Entity (OBIE) found that open banking-powered payments can offer savings of up to 90% compared to traditional card payments, making it an attractive option for businesses with high-value transactions. This is particularly relevant in the wholesale sector, where the average transaction value can exceed £1,250, placing Pay by Bank firmly in the sweet spot for cost savings.
Advantages of Open Banking payments
The financial benefits of Pay by Bank extend far beyond just cost savings. One of its most compelling features is the ability to provide instant settlements. This can be appealing for many businesses, particularly in high-end retail where the timely resolution of refunds and exchanges is critical to maintaining customer satisfaction. Instant settlements also mean that funds are transferred and cleared in real time, reducing cash flow delays and enhancing the overall customer experience.
The seamless integration of Pay by Bank into existing payment ecosystems is another key factor facilitating its adoption. For example, Acquired.com’s Pay by Bank at the Point of Sale solution in partnership with Multipay, allows for easy integration with various point-of-sale systems and alternative payment methods. This makes it simple for businesses to add Pay by Bank as an option alongside traditional payment methods, without significant changes to their existing infrastructure.
Loyalty schemes
As Open Banking payments gain traction, the potential for innovative loyalty programs and incentives to drive customer adoption is also being explored. By overlaying loyalty schemes with Pay by Bank, businesses can create compelling reasons for consumers to choose this payment method, further enhancing its appeal.
The future of Pay by Bank in the UK
The rise of Open Banking is not without its challenges. Pricing and consistency in the market have been identified as areas that require attention, with the need for a more standardised framework to ensure transparency and fairness for the entire payments ecosystem. Additionally, addressing concerns around chargeback protection and fraud will be crucial for building consumer trust and driving widespread adoption.
Despite these hurdles, the potential of Open Banking to transform the payments landscape in the UK is undeniable. By aligning payment methods with consumer expectations for speed, security, and convenience, Pay by Bank is poised to play a key role in the future of retail payments in the UK.
Effortlessly process Open Banking payments with Acquired.com
The team at Acquired.com has extensive experience in the world of Open Banking, offering a proprietary Pay by Bank solution to streamline your payment processing experience.
To learn more about Pay by Bank and how Acquired.com could benefit your business, get in touch with the team today.
