The benefits of Open Banking for your organisation
Open Banking is changing the way businesses handle payments and banking services. It allows companies to connect their banking systems to third-party apps securely, offering innovative ways to manage finances.
If you’re looking to improve your organisation’s financial operations, Open Banking is the way to go. Discussed below are the ways Open Banking helps merchants and customers make business run smoother.
What is Open Banking?
Open Banking is a system that lets banks and other financial institutions securely share customer information with authorised third-party providers (TPPs), using open APIs (Application Programming Interfaces).
With customer consent, businesses can access info like bank account details and transaction histories. This gives businesses and consumers better control over their financial data and offers an easier way for payments to be sent and received.
Open Banking as a payment method is a relatively new concept that leverages Open Banking technologies to facilitate secure, fast, and direct payments between consumers and merchants, without the need for traditional payment gateways like credit cards or third-party processors.
Open Banking Benefits for Merchants
For businesses, Open Banking offers a wide range of advantages that can help improve operations and boost customer satisfaction.
Cost Savings
Traditionally, merchants must pay high fees to payment processors for every transaction, especially for credit card payments. Card payments often involve interchange fees, processing fees and gateway charges, sometimes as high as 1-3% per transaction.
With Open Banking, merchants can accept direct bank transfers as payment which are typically much cheaper. This can save your business money, especially if you have high transaction volumes.
The savings made through an Open Banking option can be reinvested in the business or even passed on to customers in the form of lower prices or discounts.
Prevent Fraud
Open Banking payments typically go through Strong Customer Authentication protocols to minimise the risk of fraud. Many Open Banking payment solutions redirect customers to their banking app, adding an extra layer of security to confirm the transaction.
Unlike traditional card payments where fraudulent chargebacks can be costly and difficult to resolve, Open Banking payments are irreversible.
Faster Payments
Unlike debit and credit card payments which can take a number of days to process, Open Banking payments are instant and directly from bank to bank.
Open Banking Benefits for Customers
For customers, Open Banking brings its own benefits, making it a speedier and more accessible way to pay online.
Faster Checkout
As Open Banking relies on bank redirection, there’s no need for customers to go looking for their cards to fill in lengthy payment information. Ultimately, this reduces the checkout time for the customer and limits pain points during purchases.
Better control over finances
As customers are paying directly from their bank accounts, there’s no reliance on credit meaning there’s little risk over overspending. Open Banking also gives customers more control over authorising their payments.
Depending on the merchant, some Open Banking payment solutions allow customers to check their balance before making the purchase, giving them piece of mind and a better way to manage their money.
Accessibility
Not every customer has access to a debit or credit card, but most people do have a bank account. Open Banking allows those customers without cards to make payments easily if they have an active bank account.
Similarly, it allows for customers with expired or cancelled cards to still be able to make purchases.
Merchants should consider adopting an Open Banking payment option for customers to reap the benefits including
Are you preparing to alter your software development strategy over the next few months? If so, contact us today on +353 1 8041298, or click on the link below to be brought to our contact form.
