Yapily, the open banking infrastructure provider, has published new findings uncovering what merchants and shoppers view as the most important factors when offering or choosing a new payment method.
The findings come from a YouGov survey conducted on Yapily‘s behalf, which examined more than 2,000 UK consumers and 250 merchants. One of the biggest concerns for merchants lies in the chargeback space. Dubbed as “unfair”, 41 per cent have shared that they wish the process were scrapped entirely. Not all merchants shared their demand for the exodus of the process: 49 per cent said they wished it were more efficient.
In addition to chargeback concerns, the merchant data shows that cost and security are deal-breakers. Almost all of those surveyed (98 per cent) cited low fees as being an important factor when choosing a new payment method, followed closely by how secure it is. Seventy-seven per cent said transaction fees were not only an important factor, but a concern too, when selecting a payment method.
Furthermore, over two-thirds (68 per cent) said the risk of fraud was a significant consideration, while over half (54 per cent) flagged the risk of data breaches as a key concern.
This correlates with 40 per cent saying they’d be open to offering open banking, which comes with low fees and high security as standard, further highlighting their dissatisfaction with the current selection of payment methods on offer, like debit and credit cards.
An open banking solution
Nicole Green, VP product strategy, innovation and policy at Yapily, said: “Businesses are telling us they need lower costs and better security, which is what open banking offers. Now the challenge is finding the tipping point that drives behavioural change among consumers, encouraging them to make the switch at the checkout. Rolling out new features like cVRP faster and creating a clear, trusted brand complete with an industry trustmark for open banking payments will encourage adoption.
“But first, agreeing on a consumer protection model that works for both consumers and merchants is a priority for open banking. Rather than copying old, flawed models – such as chargebacks – we need to find a model that helps merchants to thrive and consumers to trust this new payment option.”
Consumer concerns remain
However, consumers are also concerned with the services they’re receiving. In fact, the majority have called for a safer, simpler way to pay, especially for everyday, low-value purchases.
Yapily revealed that for low-cost purchases under £20 from trusted brands, 49 per cent of shoppers prioritise ease of use ahead of security or protection. By the £100 mark, though, security jumps ahead, cited as the top concern for 44 per cent of shoppers when buying from known brands, and 51 per cent when buying from unfamiliar ones.
More than half (58 per cent) say a lower risk of fraud would encourage them to try a new payment method, yet cards continue to be the preferred payment method despite open banking’s significantly lower fraud rate.
Time for change
Building on these results, Yapily is now calling for change through a series of recommendations for the open banking ecosystem aimed at driving open banking adoption. This forms part of its wider mission to create a fairer financial system through open banking.
Recommendations include:
- Gaining alignment across the ecosystem on open banking’s core value propositions
- Creating a bespoke consumer protection model without chargebacks that maintains open banking’s core value propositions for merchants while giving consumers the protection they want and need
- Developing a strong, recognisable open banking brand focused on educating consumers about the core benefits when compared to other payment methods
- Introducing an open banking trustmark to help shoppers identify it as a secure, protected payment option
Stefano Vaccino, founder and CEO of Yapily, said: “Open banking has the potential to enrich people’s payment experiences beyond other payment methods. We’ve seen steady adoption so far, but the real challenge is achieving faster growth so that open banking delivers on its full potential. This report shows what needs to be done at an industry-wide level, and we’ve proposed a clear path to achieving that.
“We’re inviting everyone in the open banking and payments ecosystem to work together and develop a model that’s widely used, builds trust, and makes payments safer and better for everyone.”
