Three-quarters of payment service providers (PSPs) and independent software vendors (ISVs) intend to implement open banking at some point during the next two years, according to new research.
In a survey of senior decision-makers at PSPs and ISVs, Nuapay found that more than 75% of PSPs and 80% of ISVs were already enabling their customers to accept open banking payments – an umbrella term for methods like instant payments and account-to-account (A2A) payments that involve a shopper granting access to their bank account.
Over the next five years, both PSPs and ISVs expect open banking to become one of the most popular ways that consumers pay for goods or services, Nuapay says.
On average, of the PSPs whose merchants have gone live with open banking, 28% of payment flows have already converted to open banking-based payments, compared to 20% of ISVs. A fifth of PSPs have already seen more than 41% of payment flows convert to open banking.
‘Clear appetite’ for open banking payments
Brian Hanrahan, CEO at Nuapay, says: “There’s never been a better time for PSPs and ISVs to offer account-to-account (A2A) payments and facilitate even more widespread adoption of open banking.
“It’s clear that there is appetite for open banking payments and it will likely surpass traditional payment methods. However, what is hindering the implementation of new payment technologies is the lack of customer understanding, time and cost requirements and lack of skills.”
Over the next five years, both PSPs and ISVs expect open banking to become one of the most popular ways for consumers to pay – but this will mean the industry faces an influx from other payment methods, with the volume of open banking-based payments increasing significantly. It will be the industry’s job to ensure it’s in a position to accept this level of new volume.
Indeed, 40% of the PSPs and ISVs surveyed by Nuapay say they expect to see greater demand for new payments technologies as merchants try to differentiate themselves from the competition.
Ruwani Hewa, Product and Propositions Director at Nuapay, says: “Amid ongoing economic uncertainty and the cost-of-living crisis, the majority of PSPs, ISVs and merchants recognise that enhanced payments technology can not only provide a competitive advantage but help to build loyalty and protect their bottom line. It’s important that we support them to take advantage of technology available to adhere to demands for open banking-based payments from consumers, merchants and PSPs/ISVs.”
