GoCardless, a fintech for bank-to-bank payments, has launched Instant Bank Pay, a new open banking feature directly integrated into its global payment platform. With Instant Bank Pay, merchants can take instant, one-off bank-to-bank payments from new and existing customers while still reaping the benefits of bank debit for their recurring payments.
The announcement marks the first milestone in GoCardless’ journey to accelerate its open banking strategy, for which it received $95 million in funding at the end of 2020. By combining open banking technology with its existing global bank debit network, GoCardless can offer its more than 60,000 merchants a new low-cost, seamless and convenient way to collect instant payments that works for any revenue model.
“We’ve specialised in bank-to-bank payments for over 10 years, with bank debit being the primary payment method. And, while it provides many advantages to consumers and businesses, speed of payment authorisation is a drawback,” said Hiroki Takeuchi, co-founder and CEO of GoCardless. “Instant Bank Pay addresses this pain point by giving merchants the best of both worlds: open banking will provide instant confirmation of payment authorisation, enabling them to have immediate visibility of their one-off payments, and bank debit will continue to offer the cash flow, cost and retention benefits business owners have come to expect.”
With the introduction of Instant Bank Pay, GoCardless will expand its offering into the adjacent e-commerce market, where it can take on both one-off and card-on-file payments.
Takeuchi added, “By enabling businesses to take any kind of payment through GoCardless, we can challenge the dominance of cards and move beyond collecting subscriptions, invoices and instalments. The launch of this open banking feature means we can now serve any merchant, regardless of whether they have an ongoing or one-off relationship with their customers.”
Benefits for consumers
According to research from GoCardless, open banking is still a nascent concept in the US. Half of Americans (52%) say they have “no clue” what open banking is, and, of those who have heard of it, over a third (37%) reveal they “think of it like 5G – I know it’ll benefit me but don’t know what it is.”
Regardless of whether open banking is well known, the technology will solve problems that consumers currently face.
Seven in 10 Americans (70%) indicate they would be annoyed if they had to pay for goods or services using multiple payment methods. One example is paying with a card for on-the-spot access when they join a new gym, then needing to fill out forms to set up another payment type for ongoing transactions. Instant Bank Pay would eliminate this extra step by offering a single payment sign-up process, delivering a seamless customer experience.
Furthermore, 61% of Americans believe it’s a hassle to update the payment details for all of their regular expenses, such as streaming subscriptions, when they get a new credit or debit card. Using open banking payments means they won’t have to – their payment details stay the same unless they switch bank accounts
Benefits for businesses
While it can be used in many scenarios, Instant Bank Pay addresses an issue that is particularly acute for recurring revenue businesses. According to research from GoCardless, 85% of merchants with this business model have a need for collecting additional one-off payments. Examples include collecting a payment upfront at the start of a subscription, purchasing additional goods or services, or adding money to an account outside of a customer’s regular payment schedule.
Bank debit is not suitable for some one-off payments because it doesn’t provide instant visibility of payment authorisation. This has forced many merchants to turn to card payments, often with high fees attached, or time-consuming manual bank transfers. Instant Bank Pay is a fast and easy way for customers to make a one-off account-to-account payment. Instant confirmation provides better visibility of payments, eliminates costly credit card fees, and reduces late payments, thanks to a seamless payer journey.
Merchants can build the Instant Bank Pay option straight into their checkout flow or simply send a payment request with a link to pay. Similar to a mobile wallet payment, payers are seamlessly connected to their bank and can authorise a payment directly from their bank account in just a few taps.