Open Banking is forging a new era in European payments

A new white paper from leading digital finance company Plaid says the advent of Open Banking will herald a revolution in payments.

Open Banking is forging a new era in Europe

The paper explains the implications of this new era for companies providing payment services at the point of sale and online, and outlines the benefits of Open Banking for all e-commerce players in terms of faster and easier onboarding and payouts, reduced fraud and other benefits.

How Open Banking is forging a new era in payments in Europe reviews the new landscape after COVID-19.

This includes a wider range of merchants looking to accept electronic payments for the first time as cash use declines and more businesses seek to develop their online offering.

At the same time, merchants of all sizes are looking to handle a much wider range of payment types, including account-to-account (A2A) and Buy-Now-Pay-Later (BNPL), as well as crypto payments and SEPA request-to-pay (SRTP).

Merchants also want greater levels of customisation, including omnichannel payments, better data analytics and combining payment with other functions such as inventory, risk services and ordering.

Open Banking: the opportunity for Payment Service Providers

Open Banking (OB) provides an opportunity for PSPs to respond to the growing complexity and sophistication of merchant requirements, including smoother user experiences that encourage high conversion rates while improving transaction security.

For instance, Payment Initiation Services (PIS) are a new kind of service enabled by OB, which can help PSPs unlock higher conversion rates for merchants, drive lower fraud rates and simplify the payments experience for all parties.

PIS operate online and are used to initiate a bank transfer from an end user’s account with their explicit authentication and authorization.

The new white paper also explains how PSPs can take advantage of Account Information Services (AIS) under the provisions of Open Banking to streamline the due diligence process.

AIS work by verifying a client’s account details via an open banking call on the client’s bank.

This practice reduces laborious online or physical form-filling and also cuts the time taken to confirm user identity.

Typically, PSPs use microdeposit methods – where users have to confirm two small account deposits – to verify identity. Account Information Services provide instant identity verification and streamlines what is currently a slow, manual experience.

While Open Banking’s main objective is to give people better access to and control over their financial data, it is also leading to vast improvements in the quality and creativity of services offered to retail and corporate customers.

For PSPs, Open Banking expedites and improves a wide range of processes, from fraud reduction to onboarding and payouts.

In particular, we expect payment initiation and account information services to have a transformative effect on the cost and time involved in verifying payee and merchant bank details and delivering payments to merchants, consumers and financial institutions.

Download a copy of “How Open Banking is forging a new era in payments in Europe”, the new white paper from Plaid, by clicking HERE

The post Open Banking is forging a new era in European payments appeared first on Payments Cards & Mobile.