Ever asked yourself how complex transactions are? What costs are behind debit card payments? Or why open banking is becoming increasingly popular? In this article, Jan Willem Stoffer (Digital Banking & Open Banking Expert at Sopra Banking Software) addresses these questions and sheds light on the dynamic world of payments.
While consumers themselves do not feel the direct "pain" of individual debit card transactions, it is merchants who bear most of the costs of a payment processing operation. Costs that contribute to a global payments industry that by 2022 was worth a staggering €778 billion. The payments industry continues to grow in the coming years, to an expected value of €1166 billion in 2026.
Against this background, open banking seems a promising alternative, especially since the implementation of the revamped Payment Service Directive (PSD2) in 2018. Under PSD2, banks are required to make so-called APIs available for Account Information Services (AIS) and Payment Initiation Services (PIS).
These are interfaces that allow programs to communicate with each other, allowing Third-Party Providers (TPPs) to securely access customer accounts. This regulatory push has sparked a race, so to speak. The search has begun for innovative financial solutions that benefit consumers through increased competition and choice.
Open banking payments offer a streamlined process, where money is transferred directly between payers' and payees' banks, without intermediaries such as payment service providers. The simplicity and security of this method make it an attractive alternative for consumers and business owners alike.
Looking ahead, we see that several developments promise to accelerate the adoption of open banking payments. Regulations such as PSD3/PSR prioritize consumer interests, security and competition and foster an environment conducive to open banking innovation.
In addition, initiatives such as SEPA Instant Credit transfers and SEPA Request-To-Pay further enhance the appeal of open banking and promise faster transactions and improved payment experiences.
As the payments landscape undergoes transformation, open banking is emerging as a disruptor. A disruptor that offers a compelling alternative to what we are used to and can be real game changer for the future of payments.
