There are household names like Amazon, but each country also has its stars – think Tesco, Argos and Sainsburys in the UK. The question is: when will they adopt? First, they need to be confident in three things – stability, user experience and conversion. In the early days of Open Banking, stability was the first pin the industry had to knockdown. Thanks to advances in APIs, we’re now virtually assured of the stability of Open Banking connections in the majority of Europe. When a consumer initiates a payment, it doesn’t time out or break. It simply works. So we’ve ticked that first box. Let’s say a customer needs to be exposed to a new payment method three times before they ‘switch’ to it. Think of it as a 1-2-3 approach, where the third time’s the charm. Of course, a large e-tailer would prefer to let customers encounter 1 and 2 with other shops. And this illustrates the importance of the entire Open Banking industry working together to drive mass adoption – getting Open Banking payments on as many checkouts as possible is crucial. In terms of delivering the best user experience, we need to move further beyond single, immediate payments. For A2A payments to capture a portion of cards’ share of checkout, they need to be moved behind ‘Buy Now’ buttons. As a consumer, once you’ve used that single-click checkout button, irrelevant of the payment mechanism behind it, you won’t want to go back to a checkout experience with the merest hint of friction. Variable Recurring Payments (VRP) capabilities can power this switch. From July 2022, the Competition and Markets Authority (CMA) will mandate sweeping services by the largest UK current account providers. But I’d like to see faster progress. We have to open up what’s allowed under VRPs from its current, somewhat limited, scope. We need all the banks to offer it. And we need all Third-Party Providers (TPPs) to offer it to their payment service users. We need to work out competitive pricing and agreements on who’s liable if something goes wrong. These are all things that card schemes worked out over decades, but we need to do this within the next 1218 months. And then last, but by no means least: conversion. It’s important to all merchants, but especially to the largest e-tailers. A single fraction of a percentage of movement costs or benefits them to the tune of tens or hundreds of thousands of Pounds or Euros. Once Open Banking payments have permeated checkouts and recurring payments are in place, conversion rates will naturally rise. The final pins are being knocked down, and the big e-tailers are starting to come to the party. Time to forget about use cases and let’s just talk payments! For more information, go to https://www.token.io/ Finance Monthly. Bank i ng & F i nanc i a l Se r v i ce s 39
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