October 3, 2023


Be life confident

Why more and more people prefer to pay straight from their online bank

3 min read

Trustly is a world leader in account-to-account payments with an unmatched banking network and consumer reach of over half a billion. Here’s their view of the increasing popularity of Online Banking Payments. And, why more and more people are opting for fast, direct and more flexible digital payment methods. Trustly’s VP of Partnerships, Ciaran O’Malley, breaks down why.

A shift in consumer behaviour

account to account paymentsDuring the pandemic, consumers started to abandon cash for contactless. Cashless and mobile payments, more online debit card usage, as well as the growth in e-commerce, were around before the coronavirus hit.

Yet Covid-19 has accelerated the shift to more frictionless digital money transactions. Even Mastercard admits that the appetite for new digital payment methods is growing rapidly.

Approximately 63% of global consumers have tried a new digital payment method they would never have tried before. In that same survey, 41% reported a preference for biometric checkout.

Consumer behaviour has clearly shifted to the future. Many consumers expect speedy, simple, secure and convenient payment experiences. There is no going back to greater friction.

Online Banking Payments (also known as Open Banking Payments or account-to-account payments) is now a natural progression. This is why it’s one of the world’s fastest-growing payment methods, especially in Europe and the UK.

Cards come with baggage for both consumers and businesses

In our survey covering 10 000 consumers across Europe, 53% of 16 to 24-year-olds said they prefer using fingerprint or face ID over entering card details for payments. That number amounts to 45% in the 25-30-year-old category.

Online Banking Payments, that uses a consumer’s bank login to authenticate the user, is a natural progression for multichannel purchases in a post-COVID world.

If someone wants to buy something online and pick it up in-store, flexibility when it comes to payments is crucial.

This is true if goods are delivered to your home and you pay for what you keep, or for more experiential retail where different services in-store can be accessed.

Payments are increasingly merging with digital identity for ease of use, involving biometrics. This also eliminates identity fraud.

Plus, fees are going up for credit and debit card payments. The cost of cross-border transactions are rising and regulatory issues around Brexit haven’t helped.

For businesses to grow internationally, they need to be able to make frictionless transactions. Not pay up to 1.5% or more for cross-border charges.

Overlooked and underinvested in by many online businesses

Another inconvenience that card payments bring lay is the refund process. Refunds through purchases made by card take several days to settle into the consumer’s account after the returned goods have been received by the merchant. Slow refunds drive irritated customers to contact customer support and this causes negative experiences for both shoppers and merchants.

According to our own 2020 survey on E-commerce businesses across 10 major European markets, 25% of merchants said that handling refunds is one of their stiffest challenges. Timely processing of refunds is a crucial factor in ensuring a superior customer experience, yet this remains an underinvested area by many online businesses.

The benefits of offering payouts in conjunction with Online Banking Payments is not limited to refunds.

Financial institutions can differentiate by offering instant disbursement of funds related to loans, investments or insurance claims.

Similar to e-commerce businesses, financial institutions spend massive amounts of time and money supporting customers who are waiting for their funds.

With instant payouts, customer service can be removed (or at least reduced) from the customer journey.

So, the ability to offer instant payouts is a clear differentiator that supports customer satisfaction and loyalty.

Skipping the traditional card rails

Online Banking Payments – with no reliance on the card rails, heavy resources and integration with outdated card infrastructure – is the logical choice for merchants today and in the future.

Not only do they couple the preferences that many digital natives have for debit with the demand for slicker, more trusted checkout experiences, they also cut costs for merchants.

Trustly, for example, is completely free for consumers and up to50% cheaper for merchants to process than cards.

Consumers won’t be going back to more friction and less flexibility. And merchants certainly won’t be OK with acquiríng more costs.

So, choosing a payments partner who can remove complexity is vital for a sound online business strategy going forward.

For more on Trustly’s full-service, future-proof, cost-cutting, consumer-preferred payments solution, visit trustly.com.

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