Consumer incentives and benefits may be more common in open banking payments to encourage more people to use it as a payment method.
Open banking payments have grown slowly as a payment method in the UK since first introduced in 2017. Recent data suggests that less than 10% of consumers are using it, however, industry figures believe this will rise as new factors come into play.
Open banking payments entrepreneur Harry Luscombe suggests that PSD2 (Payment Services Directive Two) legislation has created friction with the requirement for consumers to authenticate their payment manually in their banking app.
“PSD2 is causing more friction around online payments, which has the potential to increase the adoption of open banking payments,” he adds. “It’s still not at the rate it was projected, however, it’s set to grow significantly over the coming years, and PSD2 could be highly influential in persuading customers to trial this payment method.” Currently, open banking payments still primarily benefit businesses over consumers — this creates another, huge opportunity within the sector.
Individuals have to authenticate payment by biometrics — either face or finger ID — so it’s more secure than traditional card payment.Sam Owens
Merchants enjoy low transaction fees, instant settlement of funds and reduced fraud risk. Several operators in the field still focus on this, but Luscombe believes that if the concept is to evolve, consumers must also be incentivised to use this method.
As CEO and Co-Founder of Boodil — an open banking payment method that rewards customers every time they spend — he explains: “Our new consumer engagement application ‘reverse engineers’ what the majority of the open banking market is doing. Every time someone checks out with our payment solution, we give them redeemable points to use for rewards or to enter our various prize draws for anything from vouchers and electronic goods to holidays abroad.”
Quick and secure
Fellow Co-Founder Sam Owens handles Boodil’s day-to-day operations with merchants, banks and other integration partners ranging from the automotive, e-commerce and booking application sectors.
He elaborates that it appeals to a younger audience who are more open to new technologies, solutions and payment methods. Owens says the payment solution works with the customer’s mobile banking app which confirms and authorises the payment; and while there are one-click checkouts on the market, he emphasises how Boodil is extremely quick and secure.
“Individuals have to authenticate payment by biometrics — either face or finger ID — so it’s more secure than traditional card payment,” he adds. The rewards element will encourage consumers to transition to open banking payments.