Online retail
Regulatory compliance
Regulatory compliance
November 16, 2023

Winning over consumers with Open Banking payments

Open banking payments: transforming consumer experiences

Regulatory compliance
Regulatory compliance
By Advait Sinha, VP of Product Strategy

Consumers love multiple payment options. Most would agree that this statement needs no supporting data – it is a truth that has become accepted across the payments industry. Credit and debit cards are still the most popular forms of payment in the UK (66%), with digital wallets and BNPL following closely behind. However, there exists a “dark horse” among payment methods, one that offers multiple benefits for both merchants and consumers and is growing in popularity in the UK (and worldwide): Open Banking payments.

Open Banking payments are quick, seamless and completely secure. They offer both consumers and merchants a host of benefits including boosted security, financial control and flexibility, as well as no card fees attached. However, while there are 7 million active users of Open Banking payments in the UK, this is less than 10% of the population. The question merchants need to ask themselves, is “how can I encourage more consumers to try Open Banking payments?”It may all be down to education. But what is it that consumers need to know about this form of payment and how can this awareness be raised?

Educate, educate, educate

Our recent study conducted alongside Pay with Bank Transfer by American Express explores the untapped potential of Open Banking payments within the UK. Our research shows that 24% of respondents expressed concerns about adopting new online payment methods, such as Open Banking payments. Their preference is to wait until these methods become more widespread before embracing them. This hesitation clearly stems from the unfamiliarity of the system, highlighting the importance of educating consumers on Open Banking payments and how this method can benefit them.

To bridge the gap of unfamiliarity, businesses should provide instructional videos and step-by-step guides to assist consumers when trying a new payment method for the first time. For merchants, articulating the benefits of Open Banking to customers is a challenge, but working with the right payment partner can help address that, particularly if that payment partner has a recognizable and trusted brand name.This is evidenced by 40% of surveyed respondents to our study, who expressed a desire for extra support when trying a new payment method for the first time. Simplifying payment processes and guiding customers through them is vital. Moreover, offering different channels and methods to promote these new payment methods, such as videos and mobile apps, is crucial to reach a wider audience.

Security is paramount

The study also reveals that 41% of respondents would be encouraged to use Open Banking payments if they were perceived as a more secure way to pay. Security concerns are among the most significant barriers to adoption, but many consumers are unaware of the robust security measures in place when it comes to this payment method.

Open Banking payments, such as "Pay with Bank Transfer” by American Express, offer highly secure, bank-initiated authentication. Unlike traditional card payments, Open Banking payments do not involve sharing payment credentials. When a customer makes a payment through Open Banking, they are directed to their bank's app to authenticate, often using biometrics. This process minimizes the risk of fraud and unauthorized access, offering a level of security that can help alleviate consumers' concerns.

Meeting consumer expectations

These expectations might include: transparency, flexibility and a streamlined payment journey.

According to our study, 86% of respondents want access to their bank balance information before making a purchase. Transparency empowers consumers to make informed decisions about their spending and feel comfortable about spending larger sums online. This highlights the consumer’s desire for control over their finances from the moment they create their budget to when they pay for their goods.

It also won’t come as a surprise that 61% of consumers are looking for a streamlined and convenient user experience when purchasing online. This emphasizes the importance of ensuring that the payment journey is quick and completed in as few clicks as possible. Consumers are frustrated by the need to enter what they perceive as unnecessary details – such as card numbers - during the payment process. A complex checkout with too many steps can lead to mistrust and abandoned transactions. Open Banking payments enable customers to bypass lengthy checkout journeys, whilst feeling secure in the knowledge that their payment details remain private and safe.


Open Banking payments are emerging as a powerful and secure payment method that holds great potential for both consumers and merchants. However, with just a fraction of the UK population using this innovative system, the challenge remains to encourage more consumers to embrace it. The solution lies in ensuring that consumers are educated on the benefits of Open Banking payments. Bridging the gap of unfamiliarity and addressing security concerns is essential. Providing instructional resources, simplifying payment processes, and working with trusted payment partners can pave the way for a future where Open Banking payments offer consumers the transparency, control, and convenience they desire. This not only benefits consumers but also opens new opportunities for merchants to streamline transactions, reduce costs, and improve the overall shopping experience.

Our recent study, Reaching the tipping point: How to realize the potential of Open Banking payments, was conducted in collaboration with Pay with Bank Transfer by American Express. The study presents data from 1000 UK consumers who were surveyed about their views on Open Banking. However, the paper explores more than just the consumer perspective, also delving into barriers to adoption for merchants and how these can be tackled. To learn more about how Open Banking payments can benefit your business, download the study here.

This article was originally published in The Paypers

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