How Open Banking will change the way we pay in Europe
In the fast-paced world of fintech, where being creative is the name of the game, Open Banking is turning the financial services world on its head. It’s changing the way we handle payments, and it’s a big deal for companies trying to stay ahead of the curve.
Open Banking today is really starting to break down the barriers in traditional finance. It’s making it easier to access and share financial info, and it’s opening up a world of opportunities for new ideas, competition, and better experiences for customers.
No wonder, Open Banking payments are on the rise, giving traditional card payments a run for their money.
So, why are Open Banking payments gaining ground?:
Well, for starters, they’re more straightforward. With card payments, you’re usually punching in card numbers, expiration dates, and CVV codes. Open Banking transactions skip all that hassle. You don’t need to enter your card info. This not only makes life easier for customers but also cuts down on the risk of scammers getting their hands on sensitive info.
Getting your money back is also faster and easier with Open Banking. If you paid in person and want a refund, the money can go straight back into your account without you being there in person. This smooths out the payment process and makes for a happier customer. And because Open Banking isn’t credit-based, you only spend what you’ve got, promoting responsible money management.
What’s in it for businesses in Europe?:
Switching to Open Banking is like a magic wand for businesses. It streamlines how they operate, which boosts the overall customer experience, leading to more sales. In today’s challenging world, this is a game-changer.
By making payments more efficient, Open Banking helps businesses save money by cutting out middlemen, making their bottom line look even better. Plus, Open Banking APIs give businesses access to data they couldn’t reach before, helping them make smarter decisions. This new financial insight gives them more confidence and lowers their risks, whether they’re giving out credit or offering financial advice.
The Impact on Smoothing Cross-Border Transactions:
Businesses trading internationally have always had a headache with cross-border payments. They used to be slow, costly due to currency conversion, and a playground for fraudsters. But Open Banking changes the game by allowing instant money transfers across borders and currencies, putting an end to those currency conversion woes and speeding up the payment process.
Take Trustly, for example, a leader in Open Banking. It’s revolutionized payments for over 8,000 merchants in more than 30 markets, proving that Open Banking can make cross-border transactions a breeze and help businesses worldwide.
What Lies Ahead:
Open Banking is on a roll, and the fintech and payments industries need to be ready for it. The European Open Banking market was worth $6.1 billion in 2020, and it’s set to reach $48.3 billion by 2030. That’s a huge opportunity for businesses that get on board.
Coming soon in 2024 is Payment Services Directive 3 (PSD3), which will bring new rules and standards to make Open Banking even bigger. PSD3 will improve features like emergency data access, consent management, and data access interfaces, with extra security measures to fight fraud.
And there’s more. Open Banking will keep growing, offering tons of opportunities for savings, easier access to multiple bank accounts, simpler investment choices, and better customer privacy. On top of that, Artificial Intelligence (AI) will play a big role, helping folks manage their money better by giving insights into spending habits and even predicting future financial needs.
Open Banking is already changing the game, with loads of opportunities for fintech and financial service providers. Those who grab these opportunities will offer more services, reach new markets, and become more efficient. Those who ignore Open Banking may find themselves losing customers to more agile financial solutions.
