May 13, 2020
Consumers pay in any number of ways and loyalty programs are key in driving their payment method of choice. From points on credit cards to better interest rates at financial institutions and shopping reward programs, there are loyalty programs associated with almost every business, payment method and bank.
Merchants know how competitive it can be to keep consumers coming back again and again. Not only do they have to capture their customers’ attention initially, but they must provide an engaging online experience all the way to checkout. Anything less than an ideal shopping journey can increase cart abandonment rates.
Knowing what payment types their customers are using can help merchants keep their customers through checkout and drive loyalty. The 2020 Global Payments Report already shows a worldwide trend toward digital wallets which eases the checkout process by not requiring the customer to input payment details every time they shop online. But there is another payment method to consider.
Open Banking is a new payment solution that’s driving more innovation, competition and clarity around the payment journey. Open Banking gives consumers a secure way to make payments directly from their mobile or online banking app using a credit transfer.
Open Banking also allows consumers to easily compare competing products from different financial providers leading, to more choice and better products while also helping them better manage their finances.
Enabling Open Banking provides customers with a better experience by building on brand trust and security, improving the payment experience and helping increase transaction approval rates.
Open Banking also helps reduce the number of chargebacks a merchant must deal with. When customers can authenticate directly from their bank account, there’s less risk they forget about the purchase and initiate a chargeback claim.
Additionally, when purchases are authorized directly through the customer’s bank it may speed up the timeframe to funding the merchant’s account. While settlement timeframes continue to improve with real-time payments, there’s still a small waiting period for payments authorized by the card networks.
Making payments even easier is important, but it’s important that security is not compromised. According to the Open Banking, Preparing for lift off report, there are five principle security and trust guidelines protecting consumers: