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How Open Banking Could Cut UK’s £575m Card Network Fee Bill

New data from leading open banking infrastructure provider Yapily has revealed the huge savings that organisations can make by switching from online card payments to open banking payments. And at a time when businesses are facing mounting pressure, these figures really matter.

The new data, released in Yapily’s latest report ‘A manifesto for payment innovation’, was compiled through an analysis of digital payments made in the UK. It compared average transaction fees charged in different sectors, with that of the significantly lower fee charged by emerging open banking payment providers.

In the sample month of March 2020, there were 1.6 billion debit and credit card transactions made in the UK, with a total spend of £57.5bn. After factoring in a 1% fee on each transaction, representative of a standard card fee, that’s £575m paid to card providers in one month. This number will likely have increased during the months spent in lockdown.

Yapily analysed these payments across three key sectors: EcommerceTravel and Hospitality and Financial Services, and revealed just how much money is being lost at the point of purchase by businesses large and small if they utilise traditional card payments. With Open Banking, the merchant’s bank deals directly with the consumer’s bank, without unnecessary middlemen. This reduces the amount of steps and therefore fees in the payment flow, meaning faster and cheaper transactions.

In the UK, eCommerce businesses such as Amazon, eBay or Shopify process an average of 10,000,000 transactions per month, with an average value of £67 each. With a typical card network fee rate of 1% per year, that’s £80,400,000* wasted by merchants annually. If merchants had processed their payments through Open Banking, it would have only cost them £6,360,000** per year – saving these businesses 92%, which equates to £74,040,000!

Travel and hospitality

The travel and hospitality sector is one sector that could benefit from payments innovation the most. With an average of 1.2 million transactions per year with an average value of £300 each, these businesses pay a huge £3,6000,000* every year in card network fees . And that’s if the rate remains at 1% per transaction. In comparison, the industry would only need to pay £420,000** in fees if they switched to Open Banking, a massive 88% in savings, equivalent to £3,180,000, that businesses will be free to reinvest in whatever they see fit.

Financial services

The financial services industry could also save millions by moving to Open Banking. With an average of 1.2 million transactions per year with an average value of £429, card network fees (1%) are costing the industry £5,148,000* every single year – while Open Banking would cost £660,000** over the same period, freeing up 87%, which equals £4,068,000 in savings.

Commenting on the data, Matt Cockayne, CCO of Yapily said“Businesses are facing increasing pressure brought on by the global pandemic so these savings make a huge impact for businesses. As we expect spending habits to remain cashless and online, we have to look at different, fairer ways of processing payments.

Open Banking payments come at a fraction of the cost of traditional card fees which represents significant savings for businesses. Not only can these savings be passed directly onto their customers, or reinvested into the business, open banking offers a better user experience which we’ve seen to help increase online conversion rates. We’re already seeing card networks exploring Open Banking options through partnerships, such as our recently announced partnership with American Express.”


  • Gina is a fintech journalist (BA, MA) who works across broadcast and print. She has written for most national newspapers and started her career in BBC local radio.

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