The e-commerce industry continues to grow with each passing year and this growth has been accelerated in recent times as a result of the pandemic. E-commerce is also an industry that is going through continuous change and those in this industry need to keep pace in order to remain competitive. One of the biggest trends right now is open banking platforms – keep reading to find out more.
What is Ecommerce?
First, it is important to define ecommerce. Essentially, this is the purchase of goods and services over the internet. These days, almost anything can be purchased through ecommerce and many businesses operate entirely online as opposed to having a brick-and-mortar store. Ecommerce can also include business-to-business, business-to-consumer, consumer-to-consumer and consumer-to-business.
What is Open Banking?
So, what is open banking and how does it work? This is a practice that allows third-party financial services access to consumer banking and other financial data from banks via APIs. One of the main motivations behind open banking has been the growth of alternative payment methods for ecommerce, which is now changing the landscape. Open banking can bring consumer convenience, cost savings for ecommerce businesses and reduced fraud.
Why Open Banking is Challenging Card Dominance
The rise of open banking is changing ecommerce and the way in which payments are made. This is because open banking platform payments can bring a range of benefits over card payments, including a faster checkout process with less effort for the consumer. Instead of having to input all card data, open banking allows consumers to simply confirm the transaction with their bank (often via a thumbprint).
This also means that security can be greater with open banking. Every transaction must be verified with a security step, which can prevent fraud from happening. Open banking also allows for lower fees for merchants than card acquirers and there are no additional costs to bear, such as card terminal hire. This means that it is both the consumer and the merchant that benefits from open banking, so it is easy to see why it is on the rise and so popular in the ecommerce industry right now.
The ecommerce industry continues to grow at a rapid rate and people are now buying more online than ever before. It is easy to see why as ecommerce is so convenient, it can be cheaper and provide a greater range of products and services. Ecommerce businesses need to keep pace with the latest trends in order to remain competitive and right now open banking is on the rise. Open banking can benefit both the consumer and merchant and could make card payments a thing of the past in the years to come.