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May 25 2023

Why businesses can’t afford to ignore open banking revolution

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We’re seeing millions of pounds going through our B2B Open Banking each month and it’s proving the potential value of the technology

There aren’t many times when you can make a genuine cost saving without having to compromise on something, especially in the current climate. Yet open banking provides a significant assurance to do just that without any pain.

There’s a reason why the payment technology has been gradually building in popularity in the UK over recent years, with combined CMA9 data from earlier this year showing seven million consumers and SMEs used open banking in January 2023 – a new record high.

It’s getting to the point that any transaction-heavy business should be looking to join the party. And how can they afford not to? With card acquisition and cash-handling charges seemingly on a constant upward trajectory (along with everything else), the relatively low open banking transaction fees can quickly take a large portion of cost out of your business.

We work with a lot of wholesalers at b2b.store and to put the potential savings in that context, businesses in this sector could make savings of thousands – even millions – by avoiding those acquiring charges through more traditional methods.

That could range from £6,000 to £8,000 a month for a smaller wholesaler, to millions for the really big players. They’re not insignificant figures and can have a huge impact on a business’s operations, meaning more spend can be put elsewhere.

This all sounds too good to be true, right? It’s a natural conclusion to come to, but open banking is fully regulated, it’s extremely secure and almost every major UK bank accepts it as a way of payment. If you look away from the idea that it’s a new technology and strip it back to its roots, open banking is essentially a quick, efficient way to accept immediate payment by bank transfer.

We’ve been working on our B2B Open Banking module for several months and have learned so much about it in that time. Our initial play was to focus on digital payments and that has achieved some promising results in a relatively short time, but we didn’t stop there.

Our biggest success story has been with a major wholesaler where we’ve worked with them to install B2B Open Banking at their point of online checkout. The results have blown us away and within weeks, they’re due to be processing millions of pounds in revenue per month using open banking. The savings they’re making are through the roof!

Being able to offer such a high volume of open banking transactions that go through immediately is a major play and shows the pathway to introducing open banking in bricks-and-mortar environments. And it’s in these physical point-of-checkout transactions where the money shot lies for businesses of all shapes and sizes.

We’ve worked on a development of the technology that allows businesses to integrate our B2B Open Banking capability into any purchasing location as a seamless add on. There are a variety of methods to do this, but each offers an immediate confirmation that the transaction has been successfully completed – a prerequisite to make open banking a feasible option for live payments.

It’s quick, simple and secure. Not to mention hideously cost effective.

As businesses continue to feel the squeeze, I can see this method of payment becoming much more popular, with wholesalers using it in-depot, businesses pushing open banking to consumers as their preferred online payment, and even independent retailers and foodservice outlets adopting it to make sure they’re not losing profit to expensive fees.

Open banking is simply not something businesses can ignore any longer or simply fob off as a payment method for the future. The technology is here now and should be considered a valid tool in the war on cost.