As retailers ready themselves for the busy festive shopping season – a much anticipated period with the world opening up, consumers now have become increasingly accustomed to instant contactless payments and continue to lean towards seamless payment journeys with rising expectations.

The rise of seamless mobile payment solutions like Open Banking, accelerated by COVID-19, has seen the mass migration of businesses to online stores (and particularly to mobile) to serve customers they could no longer attend face-to-face. As a result, businesses are now competing in an increasingly digital world. Consumers are no longer constrained to their local shop but have access to more choices than ever before. In this environment, delivering clunky customer journeys – particularly on mobile – is no longer an option for businesses that want to survive. 

For all these reasons, we’ll see forward-thinking companies, particularly e-commerce retailers, aggressively turn to better ways for customers to pay on mobile. As Strong Customer Authentication (SCA) becomes more prominent on card payments, and consumers undergo the pain of paying with 3DS on a mobile, we will see more and more mobile-first businesses utilising Open Banking payments as an alternative to provide seamless, efficient and safe payment experiences. 

Businesses may wish to note Nuapay’s recent research, which found that more than 54% of UK consumers, and 64% of mobile banking users, would be willing to pay via open banking today if given the opportunity. Interestingly, around three in ten consumers said that a trusted brand would encourage them to use open banking as an alternative to cards. In contrast, more than one in six said a retailer could incentivise them to use open banking through loyalty schemes. 

Looking at where consumers would be willing to use open banking payments provides interesting insights. Consumers are more inclined to use Open Banking payments for everyday retail, such as groceries, (42%), than big-ticket travel items like flights and package holidays (39%). Financial services (45%), charities (45%) and government (44%) are also all likely to see high adoption rates.

When using Open Banking payments, rather than inputting card details, consumers simply authenticate the payment on their mobile device within the natural user flow. With this process, the user experience is dramatically improved, and customers are much less likely to lose out on purchases, and reduce the likelihood of abandoned online shopping carts.

The opportunity is ripe for leading retailers to become the pioneering brand that makes open banking payments the default way to pay, as they already are in many countries, including for example the Netherlands. This would not only enable a low-friction payment experience for shoppers online but allow retailers to reduce their payment processing costs by avoiding card scheme fees. In addition, all Open Banking transactions are fully Strong Customer Authenticated (SCA) inside their natural user flow, making them far more secure and convenient. In fact, amplifying the stark necessity of consumer Open Banking adoption is the finding that more than one in ten (12%) of the UK consumers surveyed claim to have had a payment made from their debit or credit card without their permission in the last 6 months alone. 

Retailers have an opportunity to provide a payment method with the numerous advantages Open Banking can bring to both their business and consumers. Consumers are assured safe, secure, and efficient payments in-store and online. In turn, retailers can improve the customer experience to increase sales and reduce cart abandonment.

[The author of this article, Brian Hanrahan, is General Manager at Nuapay UK and CEO at Nuapay SAS (EU)] 

Helen Child, Founder & CEO, Open Banking Excellence