What are the benefits of Open Banking?

As one of the most up-to-date technological advancements when it comes to accepting payments, Open Banking is designed with protection of customer data and ease of transaction processing as strong factors. Open Banking enables businesses to access a wider range of final service products, including improving their ability to manage their cashflow better, manage credit risk and obtain funding by using technology and solutions provided by a registered Account Information Service Provider (AISP) who are authorised to retrieve account data provided by banks and financial institutions and Payment Initiation Service Provider (PISP) who are authorised to initiate payments into or out of a user’s account.

Open Banking also presents an opportunity for business to process secure, digital payments from the clients and customers directly from their bank account, to which some of calling ‘the next generation of bank transfer’.

Traditionally, a bank transfer meant that the business had to send their invoice, complete with payment details and required the payee to populate the correct account details, including the sort code, account number, amount to pay and invoice reference. This required the payees time, patience, and of course their ability to provide fully accurate account details. This manual process was slow and fraught with human errors.

With the rise of Contactless payments and the growing popularity of the likes of digital wallets, Apple Pay and M-Commerce, the process above has never felt more clunky.

Here is when Open Banking can come into its own.

How does Open Banking work?

Also known as Account2Account payments or digital bank transfers, Open Banking enables businesses to make a payment request via the likes of email, electronic invoice, SMS or by payment link, directly to their customer, with their bank details, reference/invoice number and transaction value pre-populated, which means the payee can make payments in a few simple clicks, without the need for data entry. The customer simply needs to access their online banking or mobile banking app to approve the payment. The funds are then transferred immediately to the receiving bank using the Open Banking rails.

What are the benefits of Open Banking payments for my business?

There are several benefits for businesses to consider and deploy Open Banking into their payment acceptance options.

Open Banking is rapid for both the payee and the business

• Business can either request inbound payments from their customers or sent payments out to customers, clients, partners or suppliers in a few simple clicks.
• By sending an Account2Account payment request, it enables a ultra-fast checkout process where the payee does not need to enter their card or account details.
• The payment request is pre-populated with the amount you wish to charge, invoice or reference numbers and the business sort code and account number, removing the risk of incorrect details being entered by the customer and reducing the data entry requirements – making it easier to pay and get paid!
• Funds are settled into the business bank account immediately.

Open Banking is Secure and Compliant

• Customers do not share their account details with you and remain fully in control of the payment process via their secure online banking app.
• Open Banking complies with Strong Customer Authentication (SCA) which reduces the risk of fraudulent payments, as the payee typically, has to use biometrics or password to enter their banking app.
• Because sensitive payment card data is not a part of the process, PCI DSS becomes redundant.

Open Banking helps to reduce business costs

• Typically, cheaper to process than card payments.
• No expensive hardware is required to deploy Open Banking – it is very quick, easy and cost effective to set up and deploy.
• With no card data involved, there is no PCI DSS requirements to consider – saving time and resource associated with evidencing PCI DSS compliance annually.

Open Banking can help newly formed business

• As a new business, with little trading history, it can be a challenge to open a Merchant Account for accepting card payments, especially is you are classed as high-risk sector. High-risk sectors are normally associated with businesses where there is a delay between making payment and receiving the goods/services (such as travel and bespoke furniture). It is normally far easier to get set up with Open Banking than card payments.
• Set up with Open Banking can be rapid with limited KYC (Know Your Customer) requirements and a valid business bank account to pay the funds into.

Open Banking is ultimately a great alternative to accepting card payments for businesses of any size, and if you do accept card payments, it is a great additional service to be able to offer. Gala Technology works alongside industry leaders to enable them to incorporate Open Banking into their payment systems. Using our Open Banking solution, merchants have access to all the features expected of a modern payment method. Refunds, recurring payments, instalment plans, and full reconciliations, are already part of our solution.