25% of UK merchants predict open banking to be main payment method in 5 years

One in four UK merchants predict open banking to become the most popular payment method by customers in the next five years, according to a report from Nuapay.

Its survey of payments decision makers found that open banking was believed to present the most opportunities for them, with 36% citing it as the best. It was followed by digital wallets (35% and buy now, pay later (26%).

The report claims 39% of respondents have seen an uptake in digital wallets in the past couple of years. Similarly, 35% cited open banking payments, 28% named BNPL and debit/credit cards, 25% highlighted subscriptions and direct payments, and 24% stated cryptocurrency.

On the topic of open banking payments, 43% of respondents said they have yet to realise the full benefits of open banking within their organisation, with 26% saying that although they had realised benefits, there were more opportunities to explore.

Around 20% said they only achieved a small percentage of what is possible.

The most significant benefits of open banking to organisations, according to the study, were straightforward reconciliation (33%), improved payer user experience (31%), consolidated reporting (31%) and improved access to loans (30%).

As for consumers, greater control (41%) was the number one benefit, followed by improved customer experience/convenience (37%) and the reduction in fraud risk (34%), are the main benefits.

EML’s Nuapay Business Division CEO Brian Hanrahan said, “The survey results are encouraging, demonstrating a step change in merchant awareness and appreciation of open banking payments. The increase in uptake observed by respondents and predictions for the technology to become the most popular payment method in the next 5 years point to a growing understanding of the value of open banking.”

recent report from Tink claims financial institutions in Europe are “betting big” on open banking payments. It claims that 74% of financial executives ranked increased payment security and fraud mitigation as key benefits of open banking payments.

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