74% of merchants to offer instant bank payments

Three quarters - 74 per cent - of merchants are planning to offer instant bank payments, via Open Banking, as part of their long-term strategy according to research carried out by YouGov.

The research, commissioned by UK Open Banking FinTech TrueLayer, found almost 63 per cent of shoppers would be comfortable paying by Open Banking, particularly for vehicles, car rentals, flight tickets, and sporting equipment.

Over three quarters - 77 per cent - of shoppers aged 24 to 34 are comfortable paying by instant bank transfer according to the research, the most of any demographic, followed by 74 per cent of those aged 35 to 44.

Security remains the biggest payments related concern for shoppers according to the research; 60 per cent of shoppers said they have abandoned an online basket because they were worried about a lack of payment security.

TrueLayer’s research also found generational differences in terms of authentication preferences.

Shoppers under 45 prefer to authenticate via biometrics according to the research, while shoppers over 45 prefer one-time passcodes or SMS.

The research also highlighted refunds as a loyalty opportunity for merchants.
Seven in ten - 67 per cent of shoppers - said the time taken to receive a refund is an important factor affecting their decision of whether to shop on that website again.

This number rises to 88 per cent for purchases of between £500 and £1,000 according to the research, while 81 per cent of shoppers expect a refund from an online purchase within a week or less.

Merchants also value instant refunds; 85 per cent said that offering these makes customers more likely to shop with them again.

However, these merchants are struggling to meet expectations when providing refunds, with 32 per cent receiving frequent complaints about slow or lost refunds.

The research also highlighted some of the issues with traditional card payments for retailers.

Almost half of the merchants surveyed – 49 per cent - rated the high cost of payments in their top two pain points with existing payment providers, while 31 per cent said it was their biggest pain point.

In addition, the research found 36 per cent of merchants rated high fraud and chargebacks in their top two pain points, while one in five merchants – 20 per cent - said it was the number one pain point.

Merchants with a high average order value reported the highest overall chargeback costs, 38 per cent of merchants with an average order value greater than £500 reported costs of £100 to 500k a year on chargebacks, while 11 per cent reported costs of more than £500k.

“Debit and credit cards are falling short because they weren’t designed for digital commerce at scale,” said Ossama Soliman, chief product officer at TrueLayer. “Traditional bank transfers are also flawed, taking shoppers away from the checkout and forcing them to manually copy over transaction details.”

He added: “The result is poor shopper experience, low conversion and billions in potential revenue lost.”

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