GoCardless has launched two of its latest open banking features in Germany, offering one-off payments and fraud prevention capabilities.
The direct bank payment solutions fintech has unveiled two open banking features through the introduction of Instant Bank Pay and Verified Mandates.
The fintech’s Instant Bank Pay feature allows merchants to take instant, one-off account-to-account payments from new and existing customers without sabotaging the benefits of bank debit for their recurring payments.
This service would be applicable when during an initial payment when setting up a bank debit (e.g. signing up for a physical box subscription), purchasing additional goods or services, or topping up an account outside of a customer’s regular payment schedule for example.
Although bank debit is preferred in Germany, with consumers citing it as their top way to pay for subscriptions, household bills and instalments, it is not suitable for one-off payments because it doesn’t provide instant visibility of payment authorisation, something that has forced many merchants to turn to card payments, often with high fees attached, or time-consuming manual bank transfers.
The open banking feature addresses an issue that is particularly acute for recurring revenue businesses. According to the company’s own research, 88 per cent of German merchants engaged in a recurring payments model have a need for collecting additional one-off payments.
The feature aims to supply businesses with the flexibility to collect both recurring and one-off payments with near-instant confirmation. The service achieves lower costs through reduced admin and reconciliation time, plus savings from avoiding high card fees.
The Instant Bank Pay feature can be integrated directly into a merchant’s checkout and can also distribute payment request links. Similar to a mobile wallet payment, payers are connected to their bank and can authorise payment directly from their bank account.
In tandem with the launch of Instant Bank Pay, the fintech is also launching its Verified Mandates service, which uses open banking to verify customer information automatically as part of the flow of setting up a new direct debit mandate.
The service aims to reduce the common risk of payment fraud, particularly amongst B2C companies processing a high number of transactions. Thirty-five per cent of businesses in Europe rank payment fraud among the top threats facing their business today, and in Germany, 53 per cent of merchants report losing up to five per cent of annual revenue due to fraud.
At the moment, businesses are forced to accept fraud risk — and the potential for losses — or purchase additional fraud solutions. With Verified Mandates, GoCardless offers merchants a way to stop fraud before it happens, without compromising the customer journey.
Citing the rapid and promising adoption of open banking, with 64 million active users projected in Europe by as early as 2024, Alexandra Chiaramonti, general manager of continental Europe at GoCardless, comments that the launch of these two latest features is “enabling German merchants to get ahead of the curve,” and that the company is “excited to offer this new technology” to assist merchants in addressing a series of challenges, including “high card fees to payment fraud,” in conjunction with “offering consumers a more secure … way to pay.”
The introduction of Instant Bank Pay and Verified Mandates in Germany is the latest development in GoCardless’ open banking roadmap. Earlier this year, the fintech launched Verified Mandates in the UK and announced a variable recurring payment (VRP) agreement and pilot with NatWest Group, in addition to its first VRP customer, Nude.
GoCardless is slated to release its VRP proposition in line with the industry roll-out in the UK next month, and Instant Bank Pay and Verified Mandates across Europe later this year.