Open Banking Payments vs Card Payments: A New Frontier in Payment Services
Traditional credit and debit card payments have been the common method for businesses and consumers to make payments. But open banking payments have emerged as a new alternative and are shaking things up. They provide various advantages to businesses compared to card payments, which are discussed below.
Faster Payments
One of the primary benefits of open banking payments is that they are faster than traditional card payments.
Card payments involve lengthy communication between the merchant’s gateway, payment network, customer’s bank, and merchant’s bank, which slows processing and settlement.
With open banking payments, businesses can enjoy immediate payment confirmation, which is a major time saver when compared to traditional card-based payments.
Reduced Costs
Open banking is also more cost-effective for businesses. It eliminates the need for acquiring banks and reduces interchange fees, which makes handling large sums of money more manageable and less stressful, as well as generating cost savings.
Enhanced Security & Fraud Protection
Open banking payments are designed with security in mind, making it a more secure payment option over card payments. With open banking payments, consumers authorise transactions via their bank, which verifies that they have enough funds before sending the payment. It reduces the risk of fraudulent transactions which is unfortunately common with card payments.
Streamlined Transaction Process
Open banking payments offer an enhanced customer payment experience, with fast, real-time payments and streamlined transaction processing that eliminates the need for multiple third-party verification steps. This reduction in steps saves both customers and businesses considerable time and effort.
Greater Accessibility
With traditional card payments, many consumers have found that they are restricted in terms of the types of payments and services they can access. In contrast, open banking payments provide a more open and versatile payment ecosystem that is more easily accessible.
Better Conversion Rates
Accepting payments through open banking has become increasingly popular for e-commerce merchants due to the higher conversion rates it offers. According to Open Banking Excellence, open banking payments can increase conversion rates among a growing segment of customers.
Open banking payments lead to a higher conversion rate than card payments due to their convenience for both the customer and the business, with solution providers citing conversion rates of up to 98% for open banking payments, against 85% for card payments.
As more customers become comfortable with open banking payments, we can expect the conversion rates to continue to rise.
Summary
Open banking payments provide numerous benefits beyond just being faster and more convenient. They offer businesses better security, lower transaction costs, greater accessibility, and an overall improved payment experience.
| Open banking payments | Card payments< | |
|---|---|---|
| Settlement Speed | Instant via Faster Payments | 1-3 days |
| Cost to Firm | Fees based on monthly case volume when using Safe Capital SafePay | Usually a percentage of the transaction amount + interchange, scheme, gateway, and processing fees. |
| Security & Fraud Protection | Login credentials protected by the customers bank | Card details may be retained by firm or card provider |
| Process | Mobile first + payment initiation process familiar from online banking | Manual keying of card information into card payment gateway |
| Accessibility | Payments can be initiated from any open banking enabled UK bank account | Customer may not hold a UK debit or credit card |
| Conversion Rate | Around 98% | Around 85% |
If you're looking to enhance the payment experience for your clients and reduce costs at the same time, we highly recommend considering implementing open banking payments. Don't hesitate to contact us today to learn more about how our team can help you integrate open banking payments into your business.
About Safe Capital
Safe Capital makes it simple for law firms to request, receive or return client money swiftly, safely and securely.
Share & Receive Bank Details Securely- Obtain verified bank account details for each client at the outset of the matter
- Share your client account bank details securely with your clients only when needed
- Return client money promptly at the end of a matter using the bank details on file
- Complete register of your residual balances, with detailed history of the steps taken to return funds to your clients
- Variety of workflows for contacting clients, depending on the size of the balance and contact information available
- Auto generation of forms and letters, including SRA withdrawal authorisation requests and charity indemnities
- Swift and secure client payments with one consistent payment workflow for your clients
- Clients can pay by open banking, credit/debit card or manual bank transfer
- Keep client account details away from money launderers and protect clients from payment fraud
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