Irish Guide Dog Day – Using Open Banking Payments to Assist Fundraising

Photo: Roy Keane launches Irish Guide Dog Day (Friday 7th May 2021)

As Irish Guide Dogs for the blind launch their annual Guide Dog Day, we see Fire Open Payments / Account-to-Account Payments in action.

fire.com are delighted to assist Irish Guide Dogs for the Blind with their annual Guide Dog Day. Guide Dog Day is a major annual charity event in Ireland that focuses on raising funds and awareness for the organisation. Starting this month, Irish Guide Dogs are using fire.com’s Open Banking payments solution that allows people to donate directly from their bank account with no card required. Try it out below by scanning or tapping the QR code!

Irish Guide Dogs will receive 100% of donations made through Fire Open Payments. For now, we recommend using Revolut, Fire, Bank of Ireland or Ulster Bank when making a payment; AIB expect to update their approval flow over the summer.

Scan or Tap the code to donate to the
Irish Guide Dogs using Fire Open Payments.

Fire’s CEO, Colm Lyon, had the following to say:

We are delighted to be working with Irish Guide Dogs and helping them to accept donations directly from peoples’ bank accounts. It’s such a simple and easy way for charities to accept donations – no card details to be entered, just tap or scan a QR code and approve the payment. It’s a great moment to see such a leading charity embrace a new and innovative way to accept donations.’

Fire Open Payments is available to charities or any organisation who wishes to accept payments via Open Banking.

What is Fire Open Payments?

Open Banking Payments are account-to-account payments that are initiated by the Payment Service Provider (PSP) directly from the customer’s bank account to the merchant’s bank account. In this case, fire.com is the PSP and the merchant is Irish Guide Dogs.

The core of Open Banking is based on customer consent. Open Banking allows customers to initiate a payment using their mobile banking app or online banking web portal. Funds are then transferred to the merchant using strong customer authentication without the use of a debit or credit card.

When making a payment, it is as easy as:

  1. Select your bank from the list.

  2. Authenticate with your bank and authorise the payment.

  3. You’re done!

If you’re interested in adopting Fire Open Payments as a payment method for your organisation, check out our Open Payments Page here or feel free to contact us directly.

Where does my Donation Go?

Irish Guide Dogs will receive 100% of donations made through Fire Open Payments. With the payment QR code above, you can choose how much you wish to donate.

By supporting the Irish Guide Dogs for the blind, you are directly supporting them to meet a growing demand for their services as the organisation costs €5 million to run each year! The Irish Guide Dogs have shared their yearly progress with us.

2021 Irish Guide Dog progress:

  • Breeding Programme continues to grow with 3 litters successfully born so far this year

  • 105 puppies currently being puppy raised. These pups will be the dogs who start formal training later in 2021 and during 2022.

  • 39 pups currently undergoing formal training who will hopefully be successfully matched in the coming months.

  • Assistance Dog Programme waiting list due to open later this year or early 2022 (subject to COVID-19 restrictions).

Photo: Irish Guide Dog’s new Dog Bandana

Further Information on Irish Guide Dogs

Irish Guide Dogs for the Blind is a national charity dedicated to helping people living with sight loss or autism improve their mobility and independence. For over 40 years Irish Guide Dogs have provided life-changing services and support to people across Ireland with sight loss. All services are offered free of charge and include the following:

  • The Guide Dog Programme for people who are blind or vision impaired

  • The Assistance Dog Programme for families of children with autism

  • Orientation and Mobility Training (Long Cane)

  • Independent Living Skills Training

  • The Child Mobility Programme

Irish Guide Dog website: https://guidedogs.ie/

 

VRP (Variable Recurring Payments) as an Open Banking alternative to Card-on-File and Direct Debits

The arrival of Open Banking Payments (also known as account-to-account (A2A) payments) is already starting to shift the way consumers and businesses pay and get paid. Regulated third-parties such as Fire are enabling Open Banking payments directly from a customer’s or donor’s bank account to a businesses or charities account. Open Banking is shaking up an industry that has historically been difficult to access – inviting more competition and stimulating innovation.

The figures are starting to back up the hype in the Open Banking payments space. Figures released by the Open Banking Implementation Entity in the UK show how this growth is beginning to really take off in 2021. In 2018 there were 320,000 Open Banking Payments made, and in just 2 years this figure has grown by over 1,000% to 4,000,000 Open Banking payments in 2020 and over 1,000,000 in February 2021 alone.

Given this shift by merchants and customers towards using Open Banking payments a question that often comes up from merchants is “how can I accept recurring payments using Open Banking”. This is to be the next big development for Open Banking in the UK and is called “Variable Recurring Payments”.

If you work outside of the FinTech sector, chances are you have not heard of Variable Recurring Payments before, however, with the key financial, access and control benefits to both consumers and businesses alike, it is worth familiarising yourself now.

Variable Recurring Payments (VRP) Overview

So, what are variable recurring payments and how are they different to card-on-file and direct debit solutions that businesses already have in place?

In short, Variable Recurring (or VRPs) are a new way of making payments using bank APIs, and are a cheaper and more secure alternative to Direct Debits and card-on-file for recurring payments. VRPs allow an account-holder to give permission to a regulated third-party provider to make payments from their account based on restrictions such as payment amount and number of payments allowed. VRPs could be used instead of card-on-file for Netflix, Spotify or Amazon purchases or instead of a direct debit for recurring donations to a charity. One of the first use cases that may be available will be ‘sweeping’. Sweeping is where funds are automatically transferred between two accounts of the same name (e.g. to automatically move money to or from their current account to avoid overdraft fees or to transfer to savings or pensions). VRP is particularly well suited for sweeping as the transfers are quick, cheap and secure as opposed to using cards which can be expensive or direct debits which are too slow.

The main advantages of VRP from a customer perspective is that these payments have tight limits that are setup by the customer using a “consent”. From the business or service provider perspective it gives them a cheaper, faster way to get paid than card-on-file or direct debits that also leaves them less exposed from a risk perspective as they can not accidentally bill the customer for a larger amount than intended, longer than intended and there are also no sensitive card details that can be stolen.

For example, as opposed to a customer giving a business their card details and losing control of how much and how long they can be billed, Variable Recurring Payments allow the customer to set limits on the payments via consent parameters. These consent parameters or limits provide control to the customer by allowing them to set the max amount per transaction, max amount per day, max amount per month, a time limit on the consent etc.

Examples of VRP Consent Parameters:

  1. The maximum cumulative value of payments initiated under the VRP Consent

  2. The maximum cumulative number of payments initiated under the VRP Consent

  3. The maximum payment value per payment

  4. The maximum cumulative payment value per time window

  5. The maximum frequency of payments per time window

  6. Expiry Date of the VRP Consent

The user experience when setting the “consent” with the business using a third-party provider such as Fire would look something like this.

Example VRP Journey

Example VRP journey from a user perspective (Source: Open Banking VRP Proposition Consultation Paper)

Example Variable Recurring Payments (VRP) Use Cases:

As can be seen from these use cases (also from the Open Banking VRP Proposition Consultation Paper) the customer is given a lot more control over their recurring payments.

  • As a home owner, I want to allow my electricity provider to automatically take payments from my bank account but only up to a maximum of £100 per month.
    As a user of a social network, I want to connect my bank account so that I can make quick and easy in-app authentication of payments to my friends and be able to easily disconnect it from an access dashboard with my bank if I change my mind.
  • As a new customer of a subscription service, I want to set up my subscription payments such that it expires after 6 months so that I don’t get caught in a subscription trap.
  • As a ride-hailing app customer, I want to connect my bank account so that payment is made automatically on my behalf as I arrive at my destination with a maximum payment size of £45.
  • As a customer using an online marketplace, I want to do a one-time payment setup for oneclick payments offered by the marketplace to enable a quick checkout process
  • As a customer looking to earn more interest, I want to use a third-party smart saving app that moves money from my bank accounts to my own saving account on a flexible/variable basis so
    that I can save money.
  • As a customer looking to avoid unnecessary fees, I want to use a third-party service that monitors my account to maintain a threshold balance in my account or avoid overdraft fees and moves funds as and when required between my accounts.
  • As a customer in financial difficulty, I want convenient short-term credit to avoid going overdrawn, and then to automate repayments so that I minimise both my overdraft fees and
    borrowing costs.

When will I be able to accept Variable Recurring Payment for my business?

The Open Banking Implementation Entity (OBIE) in the UK carried out a consultation earlier this year around VRPs and Sweeping. The aim of this consultation was to try and establish the next steps forward around giving access to third-party providers such as Fire to Variable Recurring Payments and also around using VRP as the preferred method for Sweeping on behalf of customers. The consultation looked at how this would look from an access, commercial, consumer protections and legal perspective. The OBIE recommendation was that VRP was the most suited method to carry out Sweeping.

There is currently no obligation for banks to provide access to third-party providers such as Fire to these APIs for VRP outside of Sweeping activities from a regulatory perspective. Access for VRP activities would currently still need to be agreed on a bilateral basis between the third-party provider such as Fire and the bank. This is something that we expect to change into the future.

The OBIE recently published their latest API standard version 3.1.8 on the 31st March 2021 which enabled both Variable Recurring Payments and Sweeping functionality. It is worth nothing that this standard is an optional standard that must be implemented by the CMA9 in the UK for access to Sweeping activities. VRP and Sweeping are very tightly coupled together from an Open Banking perspective. Sweeping was mandated by the original CMA order and roadmap whereas VRP was not. The OBIE have created an optional standard for VRP (API standard version 3.1.8 mentioned above) and have also carried out an evaluation and have concluded that the CMA9 should provide this VRP standard to provide for Sweeping access. This will effectively make it mandatory for all of the main CMA9 banks in the UK to provide access to Sweeping using the VRP APIs which opens their doors to allowing third-party providers full access to carry out all VRP activities once new regulatory or commercial access models are agreed. There is still a bit to go with some issues to be ironed out before customers will be able to pay their Netflix and Spotify using VRP as opposed to card-on-file but this is a big step in the right direction.

This new version of the API will allow companies such as Fire to access the bank’s APIs and initiate VRP transactions once the access, commercial and legal frameworks have been agreed, hopefully towards the end of 2021 or early 2022. The discussion around VRP is confined to the UK for the moment, as the EU are behind due to the lack of a EU regulatory mandate for banks to offer VRP or Sweeping access. Fire will keep you updated around the latest developments in Open Banking, Variable Recurring Payments and Sweeping.

While we wait for VRP and Sweeping to become a reality, Fire Open Payments is Fire’s Open Banking Payments product that can be used for one-off payments for your business. You can find out more about Fire Open Payments and try it yourself by reading our previous blog – The Steady Rise of Open Payments.

The Steady Rise of Open Payments

Open Payments are hitting the mainstream – it’s time to look at adopting the new payment technology

Open Banking Payments are quickly disrupting the way we make payments online. By giving regulated third-parties secure access to financial information, it is shaking up an industry that has been difficult to access – inviting more competition and stimulating innovation.

‘More than 3 million people and businesses are using Open Banking-enabled apps and services in their daily lives.’

‘We’re beginning to see growth in Open Banking Payments. In 2018, 320,000 Open Banking Payments were made. This rose to over 3.4 million in 2020. In 2021, this has jumped dramatically, rising to 1.2 million monthly Open Banking Payments in January alone.’

Openbanking.org

What are Open Banking Payments?

Open Banking Payments are account-to-account payments that are initiated by the Payment Service Provider (PSP) directly from the customer’s bank account to the merchant’s bank account.

The core of Open Banking is based on customer consent. Open Banking allows customers to initiate a payment using their mobile banking app or online banking web portal. Funds are then transferred to the merchant using strong customer authentication without the use of a debit or credit card.

When making a payment, the customer can opt to pay by Open Banking if the business enables the new payment method. When you select to pay by Open Banking at the checkout, it is as easy as:

  1. Select your bank from the list.

  2. Authenticate with your bank and authorise the payment.

  3. You’re done!

Want to try for yourself? Scan the QR code below on your smartphone camera or head over to www.fire.com/donate to make a small donation to Calcutta Connect to trial the Open Banking experience.

Why Should I Adopt it?

Open Banking Payments are both more cost effective and secure than a regular online payment for everyone involved in the transaction. It has been found that Open Banking Payments can be up to four times cheaper than card payments. The funds are also settled quicker than a typical card payment getting businesses their money sooner – it’s win/win for all parties involved.

Open Banking Payments also leverage new technologies such as making a payment via a QR code or URL link. For example, you can place a QR code on a menu, poster or even a website and the customer can pay by scanning the QR code on their smart device. Alternatively the customer can click on a URL link to take them to the payment page.

As the COVID-19 crisis has sped-up the development of online payment technologies, we are beginning to become a card-less society. Open Banking is at the forefront of this revolution and we are already seeing a huge surge of adoption here in Fire.

Lastly, it’s super easy to set up Open Banking Payments with your business with fire.com!

How do I Adopt Open Banking into my Business?

Fire.com is one of the UK and Ireland’s major Open Banking providers. In order to accept Open Banking Payments into your business, setup a free Fire.com business account where you can create new Open Banking Payment requests and integrate them with your business.

In addition to this, Fire.com provides access to our API which gives you the ability to automate the following processes for your business:

  • Initiate large volumes of bank transfers to any account in the UK or eurozone from your internal systems.

  • Embed account and transaction information in your inhouse systems, developing better financial control applications.

  • Receive event driven data from Fire, e.g. when a payment is received, so you can update your systems and reconcile faster.

Setup your account today and get started with Fire Open Payments

How to enhance your e-commerce payment experience and prevent shopping cart abandonment

In an online retail setting, cart abandonment is when a shopper shows interest in a business’s products or services by adding items to their cart, but do not complete the purchase. Cart abandonment rate is calculated by dividing the total number of completed transactions by the total number of opened carts. Currently, the average cart abandonment rate is 69.57% across e-commerce industries, meaning almost two thirds of considered purchases are not completed.

With such a large percentage of potential purchases abandoned, e-commerce merchants are continually seeking out new ways to reduce abandonment and increase conversion. The good news is that some of the most effective fixes are simple to carry out. Here are five strategies you can implement quickly, to help minimise your website’s cart abandonment rate, simplify your checkout experience and boost your bottom line.

1. Reduce user experience (UX) complexity

To help your customers find their way, you should ensure your website’s end-to-end customer journey is streamlined with effective navigation guides. A/B test the colour and placement of call to action (CTA) buttons and experiment with different graphics, product images and designs in order to determine what combinations yield lower cart abandonment rates.

A range of CTA buttons of different sizes using different fonts and colours. (Image source).

Look to minimise the number of clicks required to reach the end of the customer journey. Once the shopper is in the cart and has indicated they want to buy, the information they are presented with should encourage them to continue with the payment journey. Consider limiting the buttons or links that route to other parts of the website during the final part of the payment flow.

2. Offer multiple payment options

Have you ever gotten to the checkout on a website, filled in your address and details only to discover you can’t pay, as the retailer doesn’t accept your preferred payment method? A recent article in Forbes notes that out of 1,799 of online shoppers surveyed, 8% admit to abandoning a shopping cart because there weren’t enough payment options (2019).

E-commerce merchants can avoid losing customers by diversifying their payment acceptance methods. One way to achieve this is by adding Open Banking or ‘Pay by Bank Account’ functionality to your e-commerce payment page.

Open Banking is a new way to accept payments than can be used to supplement card payments. The customer is redirected via the shopping cart to pay directly from their mobile banking app or online bank account. There’s no data entry (such as card numbers or IBANS) required, payments settle quickly (typically within six business hours), fees are typically low for online retailers and it is more secure than other ways to get paid. Open Banking providers such as Fire are integrated with every major bank account provider in the UK and Ireland, meaning shoppers with access to an online bank account will be able to pay directly from their banking app. Open Banking payments can also be integrated with existing e-commerce systems for a fully integrated payment, reconciliation and returns process.

3. Simplify the payment authentication process

Recent changes to Strong Customer Authentication (SCA) mean online merchants are now responsible for ensuring payments made on their website are authorised and authenticated as per the European Union’s Regulatory Technical Standards. This means that if you want to accept payments online, you need to build additional authentication into your checkout flow. The additional authentication must be two of these three identifiers: something the customer knows (i.e password), has (i.e: mobile app) or is (i.e: biometrics).

Some payment methods, such as Open Banking, have a simple SCA process as the authentication forms part of the payment flow. For card payments, authentication may involve the shopper being temporarily redirected away from the payment flow to receive a numerical code via SMS or being asking to open their mobile banking app to approve the transaction. This can add friction to the payment experience and potentially increase abandonment rates.

4. Experiment with hidden cost pricing and transparency

Shipping costs and fees are an essential part of online shopping and significantly affect conversion rates. Delivery options, including carriers, delivery times and shipping costs all affect whether a customer proceeds through to checkout. According to Statista, in 2018, 63% of online shoppers abandoned their carts in 2018 due to high shipping costs. Furthermore, in a 2020 study by BayMard Institute spanning several years of statistics, extra fees like shipping were the top reason shoppers called it quits on a purchase. To avoid cart abandonment due to hidden costs, you may wish to experiment with incentives such as free delivery above a certain transaction value. Or if incentives are not profitable, consider being upfront with hidden costs at the start of the customer journey to increase the quality of your leads.

5. Collect regular feedback

One of the most important strategies to reduce cart abandonment rate is a corrective feedback loop. This doesn’t have to be complex and could include a short survey sent to a GDPR-compliant list of customers who have previously engaged with your products and services to find out how they found your website’s end-to-end UX. When it comes to designing an effective and delightful customer journey, you will never get it right first time. It’s all about iterative improvements, regular feedback and rapid testing.

Shopping cart abandonment is a major source of potential revenue loss across the e-commerce industry, however by making a few simple changes to your customer journey you can lower your website’s rate with relatively low effort. By reducing the number of clicks in the buyer flow and cutting complexity in design where possible, the proportion of leads that convert may naturally increase.

A key consideration is the payment page – it’s important to have a range of payment acceptance options available and ensure payment is as frictionless as possible. This could be achieved by adding Open Banking payment functionality to your checkout, giving online banking customers in the UK & Ireland the ability to pay quickly and securely with no clunky authentication process.

Online retailers may also benefit from testing with hidden cost transparency and incentives and implementing corrective feedback loops to inform continuous improvement.

Getting started with Open Banking

You can try out accepting payments by Open Banking on your website by opening a Fire Business Account today with no set-up cost or fixed fees. Once your account is live, simply generate Open Payment Request Links in your account manually and use them to invite your customers to pay with an account-to-account transfer. Use the links to create website buttons, QR codes, social media ads and more – the payment request is a URL so when it comes to presenting it to your customers, there are many options.

Fire also has a full API, so Open Banking payments can be integrated with existing systems and automated in, out and reconciled as required. Out-of-the box options, such as Shopping Cart Plugins for e-commerce platforms like WooCommerce are available to make integrating Open Banking payments simple, with no extra development required.

About Fire
Trusted. Digital. Payments.

The Fire Business Account helps businesses of all sizes access payment services and automate payment processes. With our technology, API and regulatory licences, Fire delivers solutions that make payments faster, more cost effective and secure. Discover our payment platform at fire.com

Streamlining payment collection for PPC Providers

How digital advertising agencies can simplify their payment workflows with client-specific accounts and debit cards.

Managing a high volume of payments for many different clients at the same time, makes sorting and reconciling payments particularly challenging for PPC agencies.

The pain of getting paid in PPC

PPC payment collection workflows differ depending on the provider’s pricing model – which can range from hourly rates, to percentage of ad spend, to performance-based pricing. However, in any PPC pricing framework, a line of credit may need to be extended to clients up to a month in advance. As the costs involved in PPC advertising can be significant – up to £/€20K per month per corporate client, depending on the industry – the risk absorbed by the provider can be considerable.

Another common payment problem arises when campaigns owned by different clients draw funds from the same business account, using the same debit card. Reconciliation – which is often manual – becomes a highly resource-intensive process. In instances where there is a payment issue, such as with a late payment, it can take time to identify the root cause of the problem. This is particularly the case when there are many clients paying into the same account.

Segregate and Simplify with a Fire Business Account

With Fire, PPC agencies can now open separate business accounts for each of their clients with no further administration. New accounts are opened via the parent account at the account-holder’s request. Each account comes with its own IBAN or Sort Code and Account Number, depending on if it is a Euro or Sterling Account, while debit cards can be ordered in any number, with transaction limits to suit your needs. As you can change which account the debit cards link to from within your account, you can easily charge campaigns to the correct account using any Fire debit card.

Fuad Aliyev, Director of AfeaGroup, a leading advert digital advert agency and ad budget analyser said of the service: “We use Fire for our clients’ digital ad campaigns and are very happy with the service. Incoming and outgoing transfers are smooth and their debit cards have generous daily transaction limits. This is a useful service for digital ad agencies that need to use a different payment profile for each of their clients – especially for larger clients.”

Using segregated accounts, reconciliation is made easier for PPC agencies and identification of a late payment, or other payment issue, is often faster. The client is given their unique details, so they can pay in instalments over the course of the campaign or along an agreed timeline. As the service provider, you absorb less risk and the value of the credit needed to be extended to the client is reduced.

A Fire Business Account is quick to open and there are no set-up costs. It can be used by PPC agencies to segregate and simplify their payment workflows, with no development needed. For those requiring integration with existing systems or an automated system, we have a number of API Services.

You can register your interest for a Fire account here. To speak to one of our team about how the account could work for your business, get in touch.

Level up your payment processes by automating pay-outs

The administrative effort tied up in processing pay-outs can be a burden for many businesses. Whether accounts payable or the issuing of refunds, paying out in a traditional sense is typically time-intensive and error prone.

In a typical workflow, a user will log in to a business bank account and manually enter a range of different details for each payment. These will be authenticated by another team member before the transactions are authorised.

However, when disbursing payments across multiple recipients, the manual process to facilitate the transactions can get out of control as your business grows. Mistakes, delays and unaccounted figures begin to take up more time as your company scales, reducing overall efficiency

Timely and accurate payments are a crucial driver for customer success, so it is important businesses pay attention to their payment processes and identify areas for improvement. Two in five UK invoices were paid late in 2018, implying there is scope to update payment processes across sectors.

A sophisticated payment workflow will look to automate manual tasks and minimise opportunities for human error. For larger organisations that already use third-party systems to organise supplier payments, a best-in-class solution would see them combining all their disparate databases into one unified payment solution. By integrating with an API for payment automation – such as fire.com’s – the need to route payments through multiple systems for complex payments is greatly reduced.

Examples of automated pay-outs
Whether it’s an inter-account transfer to a segregated customer or staff account, or automating large volume batch payments to suppliers, there are a number of ways APIs can be used to streamline the pay-out process.

Alternative lender – automated, real-time disbursements
GRID Finance is an alternative finance provider that specialises in loans for the hospitality, e-commerce and personal service industries. Being able to release funds to customers quickly is a key differentiator in the alternative lending space, so they looked to fire.com to help them automate payments-out and open segregated customer accounts in real-time, to support effective reconciliation.

As a result, GRID Finance has significantly increased speed of settlement and reduced reconciliation processing times to minutes:

“Every minute we save allows us to focus on delivering the best possible experience for our customers” says Senior Operations Manager of GRID Finance, Gary Grimes.

Bulk pay-outs to suppliers
By opening a fire.com business account and integrating with the API, businesses can initiate vary large volume batch payments to suppliers, contractors or staff. Once the workflow is set-up, users authorise each payment via the firework mobile app.

Bespoke payments providers such as fire.com can also support businesses with less development resource to automate batch pay-outs, with the only requirement being the provision of data in Excel format and the opening of a fire.com business account from which to send the funds. If you think you could benefit from this service, get in touch with our team to find out more.

Shopper debit cards
Buymie is an online retail platform that allows customers to purchase goods from local retail stores and have them delivered same day. Buymie wanted a solution that would enable them to open accounts for each personal shopper and quickly transfer the funds needed to purchase goods for customers. They also wanted the ability to freeze cards themselves, switching each one off once purchases are made.

By opening up an account with fire.com, Buymie can open additional accounts with no further KYC checks. Each account comes with its own IBAN and all inter-account transfers are made in real-time, at no charge. For enhanced security, all account users receive a notification when payments are made, while cards can be frozen or unfrozen instantly via the parent account.

Are you thinking about introducing an automated element to your pay-out process? We can help. Get in touch with our team to discuss the benefits of opening a digital account.

What are Open Payments?

The arrival of Open Banking represents a seismic shift in the way consumers and businesses use financial services. By giving regulated third-parties secure access to financial information, it is shaking up an industry that has been difficult to access – inviting more competition and stimulating innovation.

For consumers, Open Banking is better suited to meeting the needs of our increasingly digital society – offering greater choice and access to highly personalised services. For businesses, it presents the opportunity to create exciting new financial products that are more secure and cost-effective than ever before.

A one click society

Thanks to the rise of mobile apps, voice assistants and streaming media, consumers now expect quick and seamless experiences with every digital interaction. And payments are no exception – indeed, contactless payments accounted for 19% of all payments made in the UK in 2018.

In addition, consumers are increasingly customers of more than one bank or hold multiple accounts and access to accounts via mobile app has become the norm. The result is that everyone now carries a payment device in their pocket.

Account transfers traditionally presented considerable friction for the payer, with account details requiring manual entry. These have been left behind in the one-click revolution. Until now.

One of the new developments arising from Open Banking allows approved payment processors to set up (initiate) an account transfer payment for the payer to authorise in their online banking or mobile app. Termed “Open Payments”, this form of digital payment doesn’t require data entry from the payer, reduces settlement time for the payee and, in some cases, instant reconciliation.

Not only is the experience faster for all parties, it’s also more secure than other payment methods. And, with fewer parties involved in the payment process, Open Payments are also significantly more cost-effective for businesses than traditional debit or credit card payments.

How Open Payments work

Leveraging Open Banking technology, Open Payments allow people and businesses to pay directly from their account, in real-time. It’s safer, faster and more cost-effective than other payment methods available today. Here’s how it works.

The process starts when a payer is prompted to pay using Open Banking. An Open Payment request can take the form of simple web links, so lend themselves well to many payment scenarios. Here are a few examples of how the links can be displayed.

Website button

 

Bus stop shelter

 

Open Banking Payment Terminal

 

The payer’s view

When a customer opts to pay using Open Banking, they are first asked to select their account provider from a list. They authenticate and sign into their account as normal via online banking or mobile app. When logged in, they are presented with the payment details and asked to authorise the payment. The payer is then shown a confirmation of payment before being redirected back to the business they are buying from.

Check out the payer’s view of Open Payments in our explainer video:

 

Find out more about Open Banking payment technology in our white paper: From Open Banking to Open Payments – a better way to pay, and get paid.

Online retail and Open Payments: a perfect match

How e-commerce businesses can benefit from frictionless bank account payments that provide fast settlement, reduce fraud and cost less than card payments.

For years, consumer buying behaviour has been shifting increasingly towards online retail, driven by a range of factors including convenience, ability to compare deals and attractive pricing. Many high street brands are increasing their proportion of selling online, with bricks and mortar retailers experiencing a 10% reduction in footfall over the past seven years.

This shift has been dramatically accelerated by the coronavirus pandemic, with shops closed and many people unable to leave their homes. Online sales across multiple sectors have increased significantly and it appears this reflects more than just a temporary change in behaviour. A study by Morning Consult found that 24% of customers don’t intend to start shopping outside again in the next six months, while financial news website PYMNTS found that 23% of consumers who have shifted their routines online due to the pandemic don’t intend to change them.

Stay ahead of the competition

While this is good news for e-commerce, the sector is now set to become even more competitive, so online retailers need to ensure they convert occasional visitors into loyal customers to maintain and grow their market presence. It is vital e-commerce businesses focus on providing a best-in-class online customer experience to ensure they stay ahead of the competition and capitalise on increased consumer demand.

Online shoppers are quick to abandon websites that provide a poor experience and the majority of those will never return as customers. A recent study by PwC found that, after product price, speed and usability are the most important aspects to customers when shopping online. One key element of this is payment: customers want more choice and convenience when it comes to their payment options.

Introducing Open Payments

Mobile banking is already expected to overtake high street bank branch visits by 2021 and the COVID-19 pandemic is expected to drive even greater adoption of online banking. With more people than ever having access to their bank account via their smartphone, this presents an opportunity for a new kind of payment method: Open Payments.

Open Payments is a completely new way for businesses to accept real-time bank transfers from customers. With no data entry required, Open Payments provide a fast, frictionless payment experience for the customer and it benefits businesses too, with faster settlement, less fraud and lower fees than other payment methods.

Open Payments is enabled by the recent Open Banking initiative, which has been rolled out in the UK and Europe to provide more regulation, governance and consumer protection for online payments, while increasing opportunities for businesses to accept payments.

Using Open Payments, digital retailers can now accept payments by adding a simple ‘Pay by Open Banking’ button to their payment options. By clicking the button, customers are instantly redirected to their online bank account or mobile app to authorise the payment, the details of which are automatically populated and simply need to be confirmed.

Business benefits

In addition to faster settlement and lower fees for online businesses, Open Payments is the most secure digital payment option – every party in the payment process is digitally authenticated, minimising opportunities for fraud. Some e-commerce merchants may also benefit from the automated reconciliation feature of Open Payments, which dramatically reduces the time spent on manual reconciliation.

Open Payments also allow rich data to be pulled through with a payment, meaning information such as customer ID, time of payment, campaign number and product code can all be collected from a payment – aiding learning and product development.

Don’t get held up on payments

While many parts of the retail sector are facing a long, slow recovery from the pandemic, e-commerce is well positioned to grow its market share considerably. But online retailers need to remain focused on the customer experience to ensure they take full advantage of the increase in demand.

By making small customer experience improvements, such as adding frictionless, cost-effective payment methods, online merchants can differentiate themselves from their competitors, reduce costs and streamline backend efficiencies – giving them the time and space they need to focus on business growth.