In conversation: Anyone order a side of frictionless payments?

How Open Banking and the new tech it brings can transform the checkout process

02 138 In conversation How frictionless Open Banking journeys can drive customer conversion Blog header v 02

Aug 04, 2022 · 6 minutes

In this series, we'll be taking a deeper dive into the benefits that Open Banking delivers. In this post, we've brought together Ioana Kardos, our UX lead designer; William Hand, our senior product manager; and Tilly Jeakings, our product marketing manager, to shed some light on the benefits of Open Banking and the new tech it delivers, particularly to frictionless payment journeys.

How does Open Banking help reduce friction in the checkout process?

Tilly: Card payments predate the Internet and as a result, they haven’t been designed to work for our modern world, where everything needs to be as simple and as fast as possible.

New banking solutions such as Monzo have revolutionised this sector and made banking easier and more accessible. Open Banking does the same for payments – new tech infrastructure made for our modern world.

Traditional card checkout journeys are cumbersome and slow. Having your card details on you to complete checkout is outdated, and now with the new Strong Customer Authentication (SCA) regulation, it’s added yet another step to an already slow process. The shift seen in the UK banking market shows how consumer perception and desires have changed.

Twenty years ago, no one would have ever believed that there would be a new breed of banks that consumers would flock to, and switch from their traditional bank to digital-first banks, which prioritised ease of use, simplicity and beautiful UX. The same can be applied to Open Banking.

Neobanks brought banking into the 21st century, and Open Banking is doing the same for payments – a digital-first payment method which prioritises simplicity, ease of use and beautiful UX. Consumers no longer need their card on hand, no need for any extra set up, just a simple approval via their banking app with heightened security.

William: Undoubtedly, it’s clear that the checkout experience driven by card payments today sits at odds with what the modern consumer expects. Open Banking payments are already helping to remove friction at checkout with less manual input and better security built into the process. But when I look at the change we’ve seen already and think about what’s in store, I really believe we’ve only just scratched the surface when it comes to Open Banking’s effect on the checkout experience.

Gone are the “iframe” days of old with payment experiences crammed into a small box in a popup - automatic redirects and deep linking take the user through a seamless journey from start to finish. But of course, not all payment journeys start on a mobile device.

This is where another innovation comes into play. By displaying a simple QR code for the consumer to scan, a desktop checkout experience can be handed-off to a mobile device to take advantage of mobile banking apps. Once the payment is done, the consumer automatically resumes their checkout flow on the original device - no drop-offs, no orphaned user journeys, and all done in a matter of seconds. Together, mobile deep linking and device hand-off enable a truly connected cross-device experience. Want to see how it works? Have a go today by donating to a good cause.

Variable Recurring Payments (or VRPs) also offer a truly game-changing experience. Now I accept that the term is often overused, but in this scenario the impact of VRPs on the checkout experience can really be transformative. Whereas a lot of the use cases so far have revolved around subscription regular payments, ad-hoc consumer payments is where things really get interesting.

Although today Open Banking payments are reliant on an approval for each payment, with VRPs consumers can set up one consent and then simply draw funds from their account when needed, without repeated approvals.

In the past, this has only been possible using card-on-file wallets (with its regular expiry hassles) or antiquated direct debits (complete with cumbersome mandate processes and days-long delays).

On the contrary, Open Banking VRPs will allow consumers to approve a rolling consent in a matter of seconds and begin making payments instantly. I see the key to the ultimate checkout process as taking the ease-of-use of wallets driven by the payment technology of Open Banking for a one-click, secure, and reliable checkout experience.

Ioana: With traditional card payments, the user can easily mistype their card details, from the incorrect card number to CVC number. The modern consumer is also constantly on the move, and with Open Banking there’s less manual data entry that needs to be filled in. Open Banking also offers a simple payment alternative that can help merchants attract and retain customers.

Open Banking faster checkout means payments settle in seconds. The ability to pay instantly makes the checkout journey less frustrating. Merchants can release products immediately, knowing the funds have settled, and consumers are notified their purchase is completed, accurate and on the way faster.

Open Banking gives the power to consumers. Merchants do not have access to their financial data and therefore cannot access their financial details when they complete a purchase online.

For sectors such as iGaming, the speed of checking out with Open Banking means consumers can top-up in seconds. It removes waiting up to three days for their payment to settle and instead they’re able to use their money instantly. The added bonus is that they’ll receive real-time confirmation in their banking app.

When it comes to UX, online shoppers become frustrated by any inconvenience along the payment journey, and ultimately there’s a high risk of cart abandonment. High payment failures can lead to higher customer churn. Consumers will happily complete a purchase elsewhere if the payment journey is riddled with friction.

Open Banking delivers seamless payment journeys, which begin and end on the merchant’s website or app. All consumers need to do is select Vyne Pay with bank at checkout, select their bank, and approve the payment, and then they are effortlessly handed back to the merchant. It’s convenient and seamless.

Only 85% of card payments go through at checkout whereas our acceptance rate is 96%. Higher payment completion can deliver the benefits of higher repeat purchase rates and customer loyalty.

When it comes to refunds, statistics tell us that 30% of online purchases are being returned, and getting the money back can take weeks. With Open Banking, refunds are processed instantly. Most customers expect speedy refunds, and slow or missed refunds are a massive point of friction. Vyne empowers merchants to initiate refunds in seconds, which opens the door to higher customer loyalty and repeat purchases with the same merchant.

In the next instalment of our In Conversation series, we'll be unpicking how important the number of steps in conversion actually is and what this means to the consumer. We touch on cognitive loads, cart abandonment, and mobile payment flows.

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