In its ongoing efforts to make pay-by-bank systems more customer-friendly, Lloyds Bank is unveiling a kiosk that allows consumers to make payments at UK hotels. The system was developed in collaboration with Lolly, a hospitality technology specialist, and will be demonstrated at an Open Banking Expo in London.
The kiosk allows customers to make direct bank-to-bank payments without using cards. When travelers check out of a hotel, they can select the pay-by-bank option, scan a QR code, and complete the payment through their mobile banking app. Funds are transferred to the retailer’s account in real time, potentially reducing transaction times and processing fees.
Selling It to Skeptical Consumers
Pay-by-bank services have been growing in the UK. Stripe’s pay-by-bank service was successful enough there to justify launches in France and Germany earlier this year.
However, there is a sense that these services are being driven more by fintechs than embraced by everyday consumers. Some question whether the benefits of the new technology are compelling enough to encourage widespread adoption.
“Consumers already have the ability to pay-by-bank when they use their debit card,” said Don Apgar, Director of Merchant Payments at Javelin Strategy & Research. “When you pay with your debit card, it takes the money out of your account. What benefit does the consumer get by following extra steps involving a kiosk to accomplish the same end result, namely paying for a purchase using funds they have in their bank account?”
Apgar thinks Lloyds may need to find an additional incentive to spur usage of the new technology, like a discount or a free dessert. The challenge, however, is that the cost to the merchant of providing the incentive could exceed the card fees they are trying to avoid.
Positioning in the Payments Landscape
Nevertheless, the technology may offer other advantages to Lloyds. In August, the bank launched a barcode-based cash deposit tool with a similar structure. This tool essentially allows customers to use their phones to make cash payments.
“From Lloyds’ perspective, they want to be on the frontlines and be viewed as a payments innovator,” said Apgar. “Even if this doesn’t take off, they will be in the front of the line for whatever is next.”
