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On 2nd March, the BRC hosted the retail industry’s first-ever Open Banking event: “Open Banking Payments Showcase: What is the solution for your business?” attended by Open Banking providers, the Payments System Regulator (PSR), the Financial Conduct Authority (FCA), payments experts, and a good mix of retailers. The in-person event was a great opportunity to explore what needs to change to help retailers feel confident adding this payment option to checkout.   

Panel Session 1 – ‘Adopting Alternative Payment Methods’,  
Chaired by Hannah Regan (BRC) 

Panellists: 
  • Ciaran O’Malley, Head of Commercial Strategy, Trustly 
  • William Downes, Senior Consultant, CMSPI
  • Charlie Mercer, Head of Economic Policy, Coadec 

To kick off the first-panel session the open banking (OB) providers gave a brief overview of OB payments, including how they compare to other payment methods, OB in European markets, and the advantages of OB adoption. We then moved on to discuss Alternative Payment Methods (APMs) and what we can learn from their successful growth in recent years. For the OB providers, the growth of Buy Now Pay Later (BNPL) has debunked the belief it is impossible to change how consumers pay. However, the other people in the room fed back that other APMs were attractive because they offered a unique incentive for consumers that OB does not currently have.  

We then looked at whether a single name/logo was needed. Retailers fed back that consumer trust is critical to the success of OB. Providers must recognise the necessity of collaboration to get consumers onboard or risk a potential missed opportunity. OB providers responded that while it might seem attractive, the impact in other countries had been limited and there are many challenges, including who would own it, who would pay for it and potential competition issues. Since reliability and recognition already exists between the retailer and the consumer, launching OB should be about this relationship rather than forming a new relationship between the OB provider and the consumer.  

We then moved on to discuss the barriers to entry, particularly for start-ups/Fin-Techs. The payments experts gave very clear feedback that interchange fees create an uneven playing field and discourage the banks from investing in new technologies. However, there is an important balancing act between reducing interchange fees to create a level playing field, while ensuring OB retains its lower cost appeal.  

Panel Session 2 – ‘What’s Holding the Industry Back?’,  
Chaired by Hannah Regan (BRC) 

Panellists:
  • Andrew Self, Senior Manager Policy, Payments Systems Regulator 
  • Oliver Steeley, Head of Payments, M&S
  • Jack Wilson, Head of Public Policy, Truelayer  

We then moved on to panel two to discuss what’s holding retailers back and what our retailers would like to see changed. For the OB providers, they feel that OB hasn’t taken off due to the retailers’ low uptake. However, retailers responded the economic model must deliver for both the retailer and their customer and at this time, OB does not offer anything that encourages the consumer to switch from their trusted card – it does not cost any less, it is more complicated, and it takes longer at the checkout. The regulators raised an interesting point about the consumer case for faster payments of OB in a digital society, allowing consumers to know how much is in their bank account and to make budgeting easier.  

We discussed potential incentives including surcharging, discounts and loyalty programmes. Retailers fed back that these programmes would take away from the cost saving from switching to this method of payment but recognise the latter would drive customer loyalty. A suggestion was made to utilise the process of refunds with OB to create a unique selling point to get customers onboard, as instant refunds is a benefit for consumers over cards.  

One of the key priorities for retailers is consumer protection. In the same way, consumers know they are protected when they use card, consumer protection is a necessity if OB is going to be a competitor to card payments. It was mentioned that protections do already exist, but there is work to be done on bringing this together and making sure consumers know and understand their protections. Potential areas that need exploring include dispute resolution, liability, and merchant insolvency. Retailers fed back where the customer goes when there is an issue with a payment is the most important issue to resolve - they recognised trust would evolve over time but emphasise the customer needs reassurance upfront to take the first step.  

Other issues raised include the practicality of OB in-store when transactions take up to twenty seconds, the economical case for small value transactions given the flat fee structure for faster payments, and, specifically for the supermarkets, non-sweeping VRP’s and how this affects the functionality of paying for food delivery orders online.   

The panel sessions were a great opportunity for a wide range of stakeholders to explore collaboratively what needs to change to help retailers feel confident adding this payment option to checkout. We then moved on to showcase presentations from our OB providers, and then the event concluded in a networking hour. This was a great opportunity for our members to speak with various open banking providers and learn more about what they have to offer.  

We would really encourage our retailers to follow up on any conversations from the day. Key contacts are provided below, or please reach out to Hannah if you need any other introductions.