Open Banking 101
Nowadays almost all our finances are online. Bank branches are shutting down fast, but thanks to open banking, everyone can send and receive money easily. Everything is in the customers’ palm of hand, ready for payments at any given moment.
With the easy payment methods readily available, it is no surprise that more and more merchants are deciding to join the open banking revolution by adding alternative payment methods to their online businesses. A familiar check-out option through their accounts creates a smooth user experience.
Every kind of new technology can be challenging, but luckily alternative payments such as SEPA are easy enough. Open banking uses a simple process. The customers begin the process by initiating a payment to a merchant using a mobile or online banking system. This is the same as paying with a traditional bank transfer like SEPA wire. The funds are then transferred to the merchant using the real-time banking rails previously set by banking institutions, government, etc. It seems easy enough, but why should you add open banking payment methods to your e-commerce business?
What’s in it for merchants?
Open Banking payment methods are made to enable merchants to grow their customer bases without added costs or roadblocks.
More competition means fewer entry requirements
When the banking sector opened up to more flexible and contemporary laws, the financial industry grew a lot. Opening a bank account and having data available in one click enabled more customers and businesses to access each other’s services. Medium and small-sized businesses could finally enter the sector and become serious players in the market.
Open banking made it possible for everyone to have access to the same information and data such as banks and big companies, making sure their products have a competitive edge. It tore down a lot of barriers for local merchants to truly compete in the market with big companies.
Banks improve their services faster
The competition also made sure banks would keep up with the digitalization and ease of access for everyone. Open banking does not go against banks but helps them and merchants work more closely together. The need for banks to be more flexible and digital changed the process into a more customer journey-based one. Even your old traditional bank accepts e-signatures and has a brand new app that is up to date.
A tailored experience for your customers
Given that 80% of consumers will drop their shopping carts at the checkout if they cannot find the right payment method, open banking is a simple solution. The journey is as important as the product the customers get at the end. The more personalized and easier journey of the customer, the more likely they are to come back and interact with your online business again.
What’s in it for your customers?
The bank is in their hands
Almost every customer today has access to an online bank account. Time is money and no one can even afford to spend that much time now managing their finances in person. Accessing information and payment methods at any moment is not only the future but a present need.
Thanks to open banking, days of wasting time in a line waiting to be met with a disgruntled bank employee are over. By pushing the digitalization of banking services, all finances can be one click away. Additionally, open banking provides a different depth of services in comparison to traditional banks, making it accessible and interactive.
Consumers are in control of their finances
Customers used to need banks much more than banks needed customers. Open banking changed this and gave power to the customers and with it, gave the power to merchants that use it. FinTech companies are as serious and protected as banks thanks to different solutions, giving more options to customers and merchants on how they want to do business. Personal data no longer belongs to banks, but to customers themselves and they get to control who has access to it.
All the information is centralized
Having control over their financial information and data gives customers more control over their financial decisions. With easy access to payment methods, open banking is an easy choice for any merchant who wants their customers to feel at ease and comfortable with the payment process. Merchants and customers are in that way allies and not enemies waiting to both be taken advantage of by international transfer rules imposed by banks. Tailoring the experience to merchants and customers eventually benefits more sides and drives more sales for your business.
Open banking is the future
Open Banking payments help merchants to expand internationally by offering scalable payment solutions better for the customer and the merchant. As open banking has been here for years, it is a familiar process for customers and an easy one for merchants. An online business can plug different solutions into its platform and deliver a great customer experience in minutes without additional costs. Thanks to open banking, any merchant can expand to new markets without local bank accounts in a short period of time. It is the technology of the future that already exists today.
Do you see the benefits of open banking? Contact us email@example.com to see open banking options for your e-commerce business or create a FREE test account today.