The Opportunity to Use Open Banking to Solve Payments Frustration
The Open Banking industry has designed an automated Variable Recurring Payments (VRP) flow; however, this service is currently limited to me-to-me sweeping payments. Our research indicates that 76% of UK Payments Service Providers (PSPs) and Independent Service Providers (ISVs) feel frustrated that there is still no industry framework for VRPs, even though PSD2 was implemented five years ago, as 76% of PSPs and 78% of ISVs plan to integrate VRPs into their offering in the future.
Nuapay identified that while Direct Debits are a common payment method, traditional Direct Debits are not frictionless yet. Human input and traditional bank processes are slow and prone to error – often leading to failed payments. This adds costs to businesses. In today’s environment with the cost of doing business increasing, there is an opportunity for businesses to make greater use of recurring payments.
The Shortlisted Solution
In 2022, Nuapay launched Authenticated Mandates, an Open Banking powered Direct Debit solution to overcome the challenges with traditional Direct Debits. The solution enables businesses that collect recurring payments to acquire and auto-enroll new customers into a Direct Debit mandate.
Authenticated Mandates leverages Open Banking to retrieve and auto-populate bank details from consumers’ mobile banking app through an Open Banking PISP API call. This means that consumers can approve the recurring or instalment payment schedule in one click. This Authenticated Mandate sign-up process is available for all future-dated collection scenarios making it perfect for subscriptions.
Nuapay’s Authenticated Mandates solution provides an array of benefits for both the business and the payer.
- Enable fast, frictionless and error-proof sign-up process
- Reduce admin fees and manual labour
- Reduce payment failures caused by manual entry
- Eliminates Direct Debit fraud
- Reduce checkout abandonment / increase conversions at checkout
- Secure and effortless set-up process to begin an instalment or recurring payment
- Accelerated sign-up process reducing manual entry errors
- Improved user experience as no need to type out card details or read aloud over the phone
Taking The Solution to Our Partners
Nuapay powers Open Banking payments for Their Perfect Gift (TPG), a provider of open-loop virtual cards
Before Open Banking, TPG relied heavily on credit card payments. The integration of Authenticated Mandates now enables their customers to reload pre-paid cards using Open Banking-powered Direct Debits.
By converting to Open Banking payments, TPG:
- Reduced their fraud risk
- Cut operational costs associated with card fees
- Offered numerous benefits to their customers, including a reward on annual grocery spend and for a percentage of annual grocery spend donated to charity