Research by Yolt has found that the adoption of open banking could save SME online retailers over £19,000 a month in transaction fees alone.
According to Yolt, at present, small online retailers in the UK process around 217 sales a day. This would increase by 24% if that retailer also has an online and an in-person presence. Retailers pay a transaction fee of around 1.8% across all different payment types, with the biggest charges found in buy now, pay later (3.2%) and debit cards (3%).
The research found that the average small business will spend more than £22,000 a month on transaction fees. However, through adopting open banking technology, SMEs could save around £19,000 a month. This is due to open banking not utilising commission-based transaction fees, thereby providing lower and more predictable costs to the retailer.
Yolt also found that open banking could assist SME retailers in lessening other pressures on their businesses. For example, SMEs spend around 18 hours per week processing refunds. Through open banking technology, these refunds can be made instantly.
Yolt discovered that a third of SME online retails firms experienced fraud in the last year, including supply chain fraud, authorised push payment fraud, account takeovers and cyber attacks – coming to a combined loss of £4,257 per year. With open banking, many of these incidents of fraud could be avoided.
Yolt CEO Nicolas Weng Kan said, “The retail industry has been incredibly hard-hit by the economic challenges of the past few years. Small businesses in this sector in particular are likely still finding their feet and recouping losses. Open Banking technology can provide solutions which alleviate common financial stressors on these businesses and allow them instead to focus their spending on strategies to improve growth.”
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