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Having launched T365 Openpay across Europe recently, we thought it might be useful to provide a little insight into Open Banking, how it can challenge the status quo and ultimately, what its position is in the online payments space. For many, pan European bank wires relying on SEPA and UK Faster Payments is not a new concept and therefore the first question to address should be simple. If UK and intra Europe bank wires is not a new idea, then what is the excitement around Open Banking and its possible impact on e-commerce?

In a recent webinar on Open Banking, this exact point was raised and amongst the generally positive feedback, the doubters raised two critical points of concern, both of which we are addressing here at Transact365. These two key issues revolve around the back-office reconciliations and providing a customer journey equal to or better than a standard Visa or MasterCard payment.

Taking a step back from this for a moment, let’s understand in layman’s terms exactly what Open Banking is as an online payment method. Well in essence it has, for the first time, pushed the UK and European banks into opening their API’s for developers to create a more transparent, faster and simpler way for individuals and corporates to wire or transfer money without the need for a middle man financial institution to process, collect and ultimately settle those payments. Bringing peer to corporate together, these are direct wires from consumer to business. This means that a merchant can reduce their fraud and cost levels significantly whilst accepting direct payments from its customers within a 15 to 20 minute time frame or less.

Again, as we mentioned at the start of this piece, bank wires across Europe is not a new concept and therefore the first challenge of reconciliations needed to be addressed. To that end, we created a solution where the customer ultimately chooses the payment method, and in doing so, is required to select their country, name of bank, their own zip or postal code. On request, we can extend the fields being passed to include customer date of birth and full address if needed. Upon completion of the transaction, all of these fields now appear in our back office as part of the reconciliation process. This is an example of some of the fields being passed.

 

The excitement for us comes because we can see the next level of bank wires evolving where the reporting side looks near identical to that of a Visa or MasterCard transaction without the need for manual work from the finance team. By capturing the name of the bank, the customer’s email address, their IP address and postal code and being able to export this data in csv format, the merchant can process a given amount per day and expect to see that total in its own bank account at the end of that day. This is also a gross settlement solution and eliminates the need for card processing reserves or T+1, T+2 or evewn weekly settlements that you’d see from a traditional card payment.

The second challenge and perhaps the harder to address is the banks themselves and their own willingness to enhance their customer’s journey. As you might expect, Revolut and other challengers have embraced the digital payments and bank wires breakthrough as have the likes of HSBC with others fast coming on board. That said of course, the customer using the system to send funds will already be accustomed to their own online banking systems and this payment method is simply a driver to take them there where their transaction, rather handily, will have been auto created for them to simply click “complete.”

At Transact365, we continually monitor and advise clients and partners on the customer journey, the available banks inside this method and the general education of Open Banking because it is evolving fast. It matches the modern needs for so many sectors ranging from financial services businesses, ecommerce, travel and digital entertainment, all of whom rely on speedy cashflow to grow their businesses. Open Banking is for you and your business. Please feel free to reach out to me so we can demo a real time transaction, show the reconciliation reports and talk you through the UK and European bank coverage that we have.