New findings by the British Retail Consortium that the cost merchants pay to accept payments continues to increase is a daunting prospect for businesses amid rising inflation and energy price hikes.
Retailers spent £1.3 billion to accept card payments from consumers in 2021. The majority of transactions in 2021 were by debit card, which saw scheme fees rise by 28% compared to 2020, translating into an additional £141 million in costs imposed by card firms onto retailers.
UK retailers continue to be punished by the exorbitant cost of card payments. Although regulatory moves are being made (the Payment Systems Regulator [PSR], for example, are currently reviewing card scheme fees and cross-border interchange fees) retailers need not wait; Open Banking enables them to take action on payment costs now.
Open Banking payments are 2-20x cheaper compared to cards; cost-savings that can reduce both merchant overheads and the cost of goods and services to consumers.
Open Banking can also provide practical help to consumers struggling financially by creating opportunities to better control their payments through new developments like Variable Recurring Payments, which allows UK consumers to benefit from ‘Uber-like‘ automatic payments experiences.
Retailers do not have to accept rising card fees. Neither must they wait for further regulatory intervention. Open Banking is changing payments for good: in the UK, Open Banking payments have grown over 155% in the last year, reaching 7 million payments in October.
We estimate Token.io's Open Banking payments platform has helped save merchants over £90 million to date.
Now, more than ever, payment service providers must adopt Open Banking payment capabilities to meet merchants’ demand for lower cost payments.
Payment providers who fail to launch Open Banking payments in 2023 face a very real threat of lost volumes, and are certain to churn customers as retailers urgently look to relieve pressure on rising payment costs.