How can PIS be paired with AIS data for more impact? Interview with Yolt

The Paypers has interviewed Bas van Marissing from Yolt to learn more about Open Banking payments and how PIS can be paired with AIS data for more impact

(This interview was originally published inside the Open Banking Report 2021. To download the report, please click here.)

What are the advantages of Open Banking payments? 

There are key advantages around UX, reach, immediacy, and lower cost for the merchant. 

First, Open Banking payments are an account-to-account payment method, and we already know there is a market for this method as some PSPs offer it. However, the payment flow for these existing account-to-account payments is often quite clunky. To overcome this hurdle, Open Banking payments redirect shoppers to their bank environment, where they pay in their usual way with a fingerprint or facial recognition. 

Another strength is the fact that this is a pan-European payment method. As the barriers to trading across borders become ever lower, this payment method has the potential to become a standard across all EU and UK markets. 

Third, merchants benefit from the instant settlement of funds. This can speed up cash flow and it is in the merchant’s interest to promote this as a payment method. 

The final advantage is cost. Since there is no middleman in the payment flow that needs to take a cut in the way credit card companies or other payment methods do, the cost per transaction is a lot lower – in some cases up to 90%. 

What is the current uptake and what are the key factors influencing adoption? 

In terms of uptake, we are still at the beginning of our potential. The UK is probably the leading market, but even in the UK, there is plenty of room to grow. 

This is where merchants have a big role to play by offering Open Banking payments as a payment method. I already mentioned that the payment flow is very easy and that the cost of transactions is very low. Merchants can benefit from educating their customers on these benefits, and perhaps from (partially) passing on the lower cost of the transaction. For businesses with high average transaction values, this could be particularly interesting for customers and merchants alike.

What is the impact of Open Banking payments on different verticals? What key results and benefits are you seeing for your customers? 

There are a few verticals for which Open Banking is a great fit – for example, utility companies. Partly this is because of the low transaction costs, which, multiplied across tens of thousands of transactions per month can lower operational costs. But another reason is the option to offer recurring payments.

This is a very convenient ‘set and forget’ approach for utility companies as customers can automate their utility bill payments, removing the risk of them forgetting to pay. 

There are several other verticals for which Open Banking payments could be a compelling option, such as remittance companies. These companies also have a high volume of transactions, and of course, their core offering is centred around payments and FX. Remittances are typically initiated by foreign workers in the EU to countries outside the EU, and the part of the flow within the PSD2 area can be covered by Open Banking payments in a very convenient way and at a very competitive price.

How can PIS be paired with AIS data for more impact? 

To quickly explain AIS for those who are not aware: along with payments, Open Banking businesses are able – with consent – to pull account transaction data via Open Banking APIs from customers’ accounts for more than 12 months and use this to help offer tailored services. For companies such as lenders and utilities, this means you can have a detailed picture of your prospects’ financial profile before you offer them the right service based on objective information. For a utility company, this means you can put them on the right tariff and even bill them on the day of the month that they are most likely to have money in their account, based on historical transaction data.

For lenders and other companies, we are also building front-end services to take advantage of AIS data. Our Cashflow Analyser tool enables businesses such as lenders and others to see key account transaction data at a glance and make applicant affordability decisions in a fraction of the time it used to. In combination with recurring Open Banking payments, this means you can onboard applicants much faster and more objectively, potentially broadening your customer base.

About Bas van Marissing

About Yolt