Trustly Lays Out Vision for Open Banking at Retail

Open banking at retail — at the point of checkout — has the advantage of lowering the costs below traditional credit and debit options.

Christina Potter, head of eCommerce at Trustly, told PYMNTSTV that paying by bank also has benefits for end consumers, tied to a better user experience and better security. We’re not all that far away from seeing cash-back and rewards programs being offered in tandem with those payments, as consumer- and transaction-specific data help tailor those perks.

For the consumers, she said, paying via bank “allows them to leverage other payment methods beyond credit cards,” which she noted can be an expensive option, given the current interchange rate environment.

The company, she said, offers a low cost and easy way for retailers to accept payments via bank accounts, using ACH rails. Trustly, she said, operates as one of the largest providers of open banking payments — and is on track to enable $100 billion in transactions this year as the firm works with some of the largest marketplaces and retailers.

Lowering Transaction Costs

Open banking has the potential to lower transaction costs, Potter said. She said credit card transactions are reliant on a five-party model — tied to customers/issuing banks/merchants and acquiring banks.

“At every part of the process,” she said, “there’s a fee to be paid.” Trustly’s ACH-focused model, she said, is a three-party construct, which cuts out the middlemen and gives merchants more control over payment flow, and consumers don’t have to enter their information more than once, as they leverage bank logins and passwords to engage in transactions, which in turn leads to a better customer experience.

“You can set it and forget it,” said Potter, who added that “consumers don’t have to worry about card expiration dates or new card numbers.”  That experience is markedly different than what’s typically seen with digital wallets and is of particular benefit to subscription firms.

Asked by PYMNTS about the specter of fraud, Potter said that enhanced consumer authentication protocols are in the mix through multifactor authentication with bank support. Trustly, for its part, also offers a guarantee, through its real-time connectivity with the banks, that the transactions will go through, unhindered by insufficient funds, fraud or payment stops.

“We’ve been able to create our own risk algorithms and utilize data,” as she said, “to put our money where our mouth is.”

Read more: Lenovo and Trustly Team to Offer Open Banking at Checkout

With guarantees and an improved consumer experience, and better fraud controls, Potter said that merchants see higher approval rates thanks to open banking, and larger basket sizes as consumers don’t wind up bumping up against their credit limits.

Looking into the product roadmap, Potter said that open-banking and pay-by-bank options will embrace rewards programs and increased discounts to help spur further adoption. When a consumer is linking their bank account, she said, retailers can get the information they need to determine creditworthiness, can identify consumer spending habits and provide better and more personalized offers.

“The retailers that adopt this are going to be among the most innovative players and will be steering ‘ahead’ in terms of payment acceptance. … There’s a ton of room for growth and the innovation is there,” she told PYMNTS.

See more: Trustly Inc. CEO Says Pay by Bank Is the Next-Gen ACH