Why are online banking e-payments growing in popularity?

What will GDPR mean for businesses? Will global retailers become PISPs themselves? Is PSD2 adding friction to payments? There were many questions circling at this week’s Merchant Payment Ecosystem conference in Berlin, but one sentiment was clear: online banking e-payments are growing in popularity across Europe.

Trustly’s Director of Partnerships Adam Bowman spoke at the conference, giving four reasons why he thinks this payment method is on the rise.

Trust and security

Trustly conducted a survey in 2017 with research firm NEPA and revealed consumer attitudes towards banks and bank transfers. We found that in the UK, 84% of consumers trust their bank, and 76% believe that online banking e-payments are the safest way to transfer money. In Germany, according to the study, 71% said banks provide a secure online banking service and 70% used online banking e-payments in the past year.

“It’s quite interesting, this concept of trust, because obviously it’s fundamental to be willing to use any payment method,” explained Bowman. “And given our findings that Europeans generally trust their banks, it makes sense that they have high trust in online banking e-payments.”

Convenience and speed

“The convenience and speed of online banking e-payments is increasing, and not surprisingly this is driven by technology,” says Bowman. In Sweden, for example, the banks have come together to create Mobile BankID, a secure app that lets consumers authenticate themselves with just a few taps. It’s seen fast uptake across the country, and this has made it dramatically easier for consumers to make payments directly from their bank account.

Speed is also playing a major factor. The implementation of the Faster Payments infrastructure reduces settlement times from hours to seconds, and this benefits both the merchants and consumers. It also enables instant settlement of refunds to consumer bank accounts, drastically improving the shopping experience.

Simplified cross-border shopping

Europeans are increasingly shopping from online retailers in foreign countries, but when it comes to payments, there are several challenges. In order to accept bank payments from consumers in other countries, merchants must integrate with local banks individually. They also struggle with currency conversions and burdensome administration associated with returns.

But with an online banking e-payment provider like Trustly, merchants can sign just one contract to support more than 3,300 banks in 29 European countries. Refunds become extremely efficient, and Trustly handles all of the foreign exchange, so consumers can pay in their local currency while ensuring merchants settle in their preferred currency.

Alignment with PSD2

The acronym on everyone’s lips in the payments industry is PSD2. The legislation is now being adopted across the European Union and aims to drive innovation, foster competition, increase security and reduce costs, ultimately benefiting consumers.

Banks are encouraged to create APIs that let third-party payment providers access consumer bank accounts on their behalf and initiate bank payments. As PSD2 now requires all online payments to carry two-factor authentication, it is adding friction to the card experience, while simultaneously simplifying the online banking e-payments experience for consumers. Bowman is confident that this will further drive adoption of bank transfers.

Moderator Mélisande Mual, managing director of The Paypers, agreed that the market is ripe for growth in alternative payments such as online banking e-payments. At Trustly, we couldn’t agree more and are look forward to offering our services across Europe.

Interested in meeting us at one of our upcoming events? Check out where we’ll be next and schedule a meeting to learn more!

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