In a recent interview, Ciaran O’Malley, Vice President of Partnerships at Trustly and involved in open banking initiatives in the UK, spoke at length about the industry trends surrounding the rise of online payments that are rapidly becoming prevalent in many parts of Europe, such as Sweden, Estonia, Finland, and The Netherlands.
The discussion focused on two underlying trends surrounding the rise of account-to-account payments &#8211; convenience and customer interaction with banks.
Convenience is a major factor in conversion, so Trustly aims to make it as simple as possible for customers to make payments online. The innovative BankID system streamlines internet transactions, without the need for users to remember lengthy card details and passwords &#8211; a factor which O’Malley believes responsible for many customers abandoning payments at the checkout screen. This is especially true if credit or debit card details expire, something that never happens with Trustly’s system.
The firm is continuously looking for ways to make transactions to online casinos and other verticals the easiest they possibly can be, most recently by installing QR codes onto the tables of brick-and-mortar casinos.
Moreover, excellent customer experience has become a necessity for any banking service. A one-size-fits-all approach to customer service has been made obsolete by the rise of personal financial management apps that allow users to tailor their experience has meant that this is now the assumed norm. Further, Trustly’s own research suggests that 65% of consumers consider the refund experience when purchasing online, demonstrating the demand for Trustly’s instant refund service which allows merchants to swiftly fulfill the needs of their customers.
Amongst other topics, O’Malley also discussed the problems facing merchants seeking to start providing their own account-to-account payment service and why, as a result, they instead turn to companies such as Trustly.
Multiple areas of investment for aspects like coverage, maintenance, backend processes, and payment risk are all required but many banks lack the infrastructure or staff needed to install these necessities.
Simply building a direct integration to the APIs (Application Programming Interface) is not enough as they only allow for the initiation of payments and offer nothing in the form of refunds or reconciliation.
Bank payments are also not guaranteed so there needs to be a system in place to manage the risk of initiated payments not being settled. There is normally no way of predicting if this will happen so procedures need to be in place beforehand.
In order to truly extract the benefits of account-to-account services, specialist expertise, upfront investment, maintenance beyond the installation of bank APIs, and faster network connections are all necessary.
Bearing all this mind, it appears that banks and other established financial institutions will continue to choose specialist firms like Trustly to manage account-to-account payments rather than implementing them internally. Given the meteoric rise of cashless transactions that was caused by the COVID-19 pandemic, expect the influence of alternative payment providers to only increase further.