How Instant Bank Payments Are Set to Change the Customer Experience in Europe

Too often, online payments are slow, insecure and prone to friction. So how can instant bank payments help businesses offer a better customer experience?

TrueLayer is a global open banking platform that makes it easy for anyone to build better financial experiences. Businesses of every size use TrueLayer to power their payments, access financial data, and onboard customers across the UK, Europe and Australia.

Till Wirth, head of product for core banking at TrueLayer, is an alumnus of Oxford University and NYU and also previously served as a lead product manager at GOV.UK/Pay. Here he discusses with The Fintech Times the growth of instant online payments.

Till WirthTill Wirth
Till Worth at TrueLayer

When it comes to online payments in Europe, expectation rarely meets reality. Today’s consumers benefit from a fast-paced digital economy, and they want payments that can keep up. Offering a rapid, frictionless experience is the way to win them over, especially in industries where timing is everything.

Take trading, for example. Research from TrueLayer and YouGov has found that 64 per cent of current investors place more trust in platforms that offer instant payments. And they’re not alone. Two thirds of e-commerce customers take refund time into consideration when making a purchase.

Smooth and efficient payments, refunds and withdrawals go a long way with consumers. Too often, though, actual payment experiences fail to live up to this ideal. Cards are still the preferred payment method in countries like Spain, France and Ireland, leaving customers and businesses alike prone to slow and cumbersome experiences. And even other options like manual bank transfers can be slow and error-prone.

Instant bank payments offer a solution to this problem. Examples such as TrueLayer Payments use open banking technology and Europe’s fastest payment rails to let businesses take advantage of instant pay-ins, pay-outs and refunds.

So how can instant bank payments help European companies offer a better payment experience to their customers? Here are just a few of the biggest advantages.

Faster experiences

In many industries, providing an instant experience is key to winning and retaining customers. Take trading, for example. Delayed payments can cause customers to lose out on big opportunities. Case in point: a quarter of European investors have missed investment chances because their funds took too long to reach their accounts.

Unfortunately, traditional payment methods often prevent merchants from offering this kind of seamless experience. With cards, payments can take up to 10 days to settle. Whether consumers are trying to top up an account or get a refund, delays like this can frustrate customers and erode their loyalty.

Instant bank payments can help merchants avoid these pitfalls. By harnessing the speed of instant payment rails, they enable businesses to offer instant experiences to their customers. This gives consumers piece of mind and a far better experience, preserving customer loyalty and reducing churn.

Reduced friction

Smoothness is just as important as speed in offering a great customer experience. An efficient and intuitive payment flow reinforces a merchant’s credibility and builds trust in their brand. In turn, this leads to higher conversion rates.

Too often, though, traditional payment methods add friction to a process that should be seamless. When customers pay with cards and manual bank transfers, for example, they have to enter their payment details by hand, significantly slowing down the process and increasing the risk of mistakes. And while online card payments now benefit from increased security thanks to the implementation of strong customer authentication (SCA), customers now have to take extra steps to verify the ownership of their accounts. Customers are more likely to abandon their transaction when faced with either scenario.

Instant bank payments remove these barriers. Customers don’t need to type in their details to make a payment, saving time and eliminating the risk of human error. SCA is also built into instant bank payment flows, making the process simpler for the consumer. Each of these factors reduces friction, making it easier for customers to complete their payments.

Greater safety and security

At a time when many fintech firms continue to grapple with fraud, providing a good experience means providing a safe experience. Still, traditional payment methods remain vulnerable. In Europe, fraudulent card transactions were valued at €155million in 2020. Three quarters of those losses were the result of card not present (CNP) fraud, where scammers use a consumer’s card remotely to make a fraudulent payment.

As these figures suggest, cards in particular are problematic from a security perspective. Customers must share or store details to make a payment, exposing them to fraud if their information is stolen. In these cases, merchants don’t just suffer from chargebacks, but also from reputational damage and a loss of consumer trust.

By leveraging the security of open banking, Instant bank payments keep that from happening. Providers like TrueLayer typically prepopulate payment details, so unlike cards, they’re never shared or stored. This ensures customers’ data and privacy are kept safe and secure. SCA also ensures that customers verify their identities for each transaction, further reducing the risk of fraud.

Throughout Europe, instant bank payments are an effective way to create a fast, safe and secure customer experience.

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