Open Banking and the future of payments - interview with Volt

Tom, where are we with Open Banking?

What was a nascent PSD2 infrastructure has quickly developed and matured into a significant market participant, where direct payments and account-to-account (A2A) are concerned. There continue to be broad and consistent improvements to the Open Banking infrastructure. Transaction numbers are growing exponentially.

Leading brands are engaging in the Open Banking payments discussion and showing high interest. They all want the same thing; to leverage the benefits of a faster, simpler, and more secure payments service.

The development of new standards in Open Banking is also central at present. In the UK we saw the Competition & Markets Authority announcing recently the mandate for Variable Recurring Payment (VRP) for Sweeping. This is a significant development to the Open Banking regulatory framework, and we expect a strong impact.

Could you please tell us more about VRP?

VRP is a game-changer. It’s essentially the Open Banking equivalent to card-on-file.

Under the VRP model, a shopper provides certain parameters to their bank which overrides the need for Strong Customer Authentication (SCA) in a form of a trusted beneficiary mechanism. This ultimately delivers a single-click payment experience for Open Banking payments.

We expect VRP to be disruptive. Particularly to direct debits which are an antiquated payment method with a difficult operating interface and slow settlement times. VRP provides for the same underlying function in recurring payments of a variable amount on a long-life consent.

VRP has been mandated for Sweeping only – between accounts in the same name or a ‘me-to-me’ payment scenario – but we expect this to open up under a commercial or premium API service and a delegated authentication mechanism.

How can consumers be encouraged to adopt A2A payments at the checkout?

With SCA requirements on card transactions coming into force on both sides of the English Channel, the card payments experience is becoming more cumbersome – whilst Open Banking payments are becoming more convenient.

As we know, A2A payments offer real-time settlement and eliminate card fraud, and as businesses embrace a new, more digital way of working, there’s a strong impetus behind the adoption of this new payment mechanism. We are confident that the strong market acceptance we’re already seeing will continue to accelerate.

One of our fundamental beliefs at Volt is that real-time payments will become the new normal. Consumers, like businesses, will demand it alongside security and convenience. Open Banking and A2A deliver on all three.

What role do QR codes play in the future of payments?

A significant one. We have known about the prominence of QR codes in Asia for some time. This hasn’t been the case in more Western markets, but we believe it will be in the future.

There are two factors at play here: first, the use of the QR code as a basic technical communication point, which is accelerating across the globe. Second, its interoperability means that, in an increasingly contactless society, the QR code will become pivotal to the payments experience.

At Volt, we’ve developed a QR code solution that enables the initiation of an Open Banking payment, and which invokes a decoupled authentication flow – on mobile typically using biometrics, which delivers a more streamlined experience.

We’ve seen more and more QR codes during the pandemic in restaurants and retailers, and we anticipate this trend of increased adoption will continue in earnest.

Will open payments become the next globally ubiquitous payment method? What is your prediction?

Yes, 100%. Europe aside, there are 58 countries around the world currently rolling out their new generation real-time account-based payments initiatives. In Europe, we call this Open Banking, but in Brazil, it’s PIX, in India, the Unified Payments Interface, and in Australia, the New Payments Platform.

Under this new model, the legacy card scheme mechanism is disintermediated to facilitate direct, real-time money movement between bank accounts – which also happens to be safer and more secure.

At Volt, our intelligent payments platform harmonises these initiatives to a single point of access and interface. We are the payments people restless for real-time working to accelerate this global revolution in real-time payments. It’s already exciting, but we’re just getting started.

Volt has contributed to the Open Banking Report 2021. Click here to download the report.

About Tom Greenwood

Tom is Volt’s Founder & Chief Executive Officer. He is responsible for managing strategic relationships, developing strategy and planning, and driving international expansion. Tom previously founded IFX Payments, a multi-billion dollar turnover fintech business operating across Europe and the Middle East.

About Volt

Volt is an open payments gateway that’s driving the global adoption of real-time, account-to-account (A2A) payments. By bringing together disparate, domestic instant payment schemes, it’s empowering merchants around the world to receive A2A payments in a universally consistent way.