CM – Open banking payments could end card dominance

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Payments through open banking capabilities could end the dominance of cards for payments, with Europe ahead of the pack.

According to a study by Juniper Research, the global value of payments made through open banking will be 116 by 2026 Billion open banking payments will account for just $ 4 billion of total global payments this year, Juniper said.

Increased user awareness is expected to drive increased usage over the next five years, with Europe leads the way and is expected to make up 75% of the total by 2026. Study co-author Damla Sat of Juniper Research said, “PSD2 is a great starting point, but not the end goal for open banking – supportive regulation must be a platform for much greater innovation. The race is on for providers to build the most convincing skills for the future of Open Finance. ”

Open banking services were made possible by the EU’s Payment Services Directive 2 (PSD2), which came into force in 2018. and offer services using this information. For example, with your consent, a company can take payment directly from your account without you leaving their website. In the UK, the Open Banking Regulation is its equivalent.

Juniper Research recommends API vendors go beyond the minimum regulatory requirements “to develop advanced use cases such as aggregating additional products, including loans, credit cards and mortgages, if awareness growing ”.

In the UK, banks have had to implement the Competition and Market Authority (CMA) Open Banking Regulations, which reflect PSD2.

Figures from the UK Open Banking Implementation Entity (OBIE) indicate that More than four million Open Banking payments were made in the UK in 2020, compared to 320,000 in 2018, and nearly six billion API calls to servers in the UK compared to just 66.8 million in 2018. </ The open banking revolution recently received a huge boost when card companies Visa and Mastercard launched major fintechs in the Br so.

In June Visa acquired the Swedish open banking fintech Tink for 1.8 billion euros, followed by the takeover of Denmark’s Aiia last month.

Since Juniper predicts that payments via open banking Banking APIs will end the dominance of payment cards, it is not surprising that card companies are acquiring open banking capabilities.

The giant marketing machines behind Visa and Mastercard are changing open banking, which is often hampered by a lack of consumer understanding Raise level while the card companies’ massive technical development budgets and teams increase the open banking functionality.

In a weekly conversation with Computer after Mastercard acquired Aiia, Co-Founder and CEO Rune Mai said, “The combination of power and selling a company like Mastercard with the technology we have has been a great opportunity. We want to grow fast, but we want to scale so that we get a lot of customers who improve our technology. ”

After the acquisition by Visa, Tink CEO and co-founder Daniel Kjellén said:“ We have something incredible built and only scratched the surface at the same time, ”he said. « By joining Visa, we can move faster and reach further than ever before. »

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