Bank payments have evolved remarkably in recent years. And one of the most successful has been open banking or open banking, which facilitates buying a car, the realization of investments and even do donations to charities. It is an alternative that, each time, will be used by more brands of the electronic commerce.
Although open banking payments (in the form of instant bank transfers) have found their niche in sectors such as wealth management, iGaming, credit, lending and digital banking, most e-commerce companies have not yet have adopted this new payment option.
A relevant figure at a global level reveals that, in 2022, the income opportunity created by open banking will be more than 8 billion euros, that 71% of SMEs expect to use a service of open banking and that 64% of adults plan to benefit from an open banking service by that year (according to PwC).
However, at a time when electronic commerce is booming in Spain, since turnover throughout the national territory was 51,600 million euros last year, according to data from CNMCData, there is a great possibility that companies in this industry embrace the possibility of open banking payments.
How is the sector to channel this opportunity?
“A profound change is necessary in the client that passes through granting greater confidence to alternative models to traditional banking, and that confidence, in addition, must materialize in the transfer of data to third parties,” explains a Deloitte report on banking open in Spain.
The consultancy explains that, when entrusting their savings to an alternative provider to the traditional one, the Spanish, according to a survey they carried out, prefer big banks (47%) and, to a lesser extent, to large distribution (37%), leaving little room for other players such as fintech companies (10%) or the telcos (19%). Therefore, the possibility of a greater transfer taking place and of accelerating the growth of this model are broad.
In this sense, TrueLayer, one of the great players Open Banking Europe, commissioned an independent research consultancy with extensive payments experience, to better understand why open bank payments are particularly well-suited to challenging card dominance.
Open banking payments have been growing for a few years, but that expansion has accelerated in the last year. For example, payments grew by 485% in the UK between August 2020 and August 2021, reaching almost 2.4 million successful payment initiations in a single month. And Spain should follow the same path, taking into account that its legal framework is defined by the European directive on digital payment services PSD2, which entered into force in Spain on November 24, 2018, just three years ago.
All this indicates that payments made through open banking are speed up in Spain as its implementation by companies increases, now that Spanish banks have implemented app2app authentication as a result of the new PSD2 regulation.
Previously, those users who tried to make an open banking payment from their mobile phone were redirected to a microsite and they had to log in by entering a username and password, before being asked to confirm payment.
Now with app2app the consumer is automatically redirected to your banking app on-line, where can sign in biometrically with Face ID or fingerprint. This makes the entire payment process much more streamlined and user-friendly, with fewer steps and greater security.
TrueLayer is the only open banking provider that supports app2app processes for all Spanish banks today. The company, which launched its platform for open banking in Spain in 2020, has been testing these processes for data and payments since February, and in recent months has found that conversion rates have increased by 10% on average.
Open bank payments are starting to enter the full picture. They offer a strong alternative to the ubiquitous card schemes. Also, as open banking users continue to grow, e-commerce companies have a limited window of opportunity to join the most innovative brands in shaping the future of payments on the Internet. open banking.
Photo: pragma.com
