Europe’s upcoming Open Banking regulations offer some opportunities for merchants to save on payments transaction costs. As the following article reports, new rules will allow merchants to directly access consumer bank accounts for payment if permission is granted.
Large retailers are eyeing up the potential benefits of the forthcoming introduction of revised payment rules in Europe, with a sizeable proportion planning to tap directly into consumer account data to drive down transaction fees, tailor products, and create innovative loyalty programs, according to research from Accenture.
Accenture surveyed nearly 80 payments executives at large retail companies and banks across Europe to determine how they will respond to the new regulations, under which banks must grant third parties access to consumer data with the customer’s consent.
While the move to Open Banking will help banks reach new customers by enabling them to offer plug-and-play financial products through third parties, it will also give retailers the opportunity to accept payments directly from a consumer’s financial institution without the need for an intermediary, as well as let them access a consumer’s financial data. Jeremy Light, who leads Accenture’s payments practice in Europe, says: “Open Banking is an opportunity for retailers to provide a better customer experience through flexible payment initiation and faster refunds, and to increase cash flow by bypassing card networks and fees and reducing fraud and chargebacks.”
Of the 43 retailers questioned by Accenture, 74% plan to use bank APIs to access customers’ financial information so they can tailor products, while 51% expect to generate relevant point-of-sale offers and discounts based on consumer spending habits. Fifty three percent also expect to bypass payment gateways and acquirers and initiate payments directly with banks to negotiate better transaction fees.
Disintermediation has disrupted many industries and the payments industry is not immune. Merchants have long looked for ways to bypass the card networks, and now Europe has new regulations that will allow this. The U.S. has seen similar examples as decoupled debit and ACH payments become more popular for both consumers and merchants alike. But customers’ love of plastic and related rewards programs will still be the payment method of choice.
Overview by Raymond Pucci, Associate Director, Research Services Advisory Service at Mercator Advisory Group
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