It is therefore not surprising that players in the payments value chain are now eagerly adopting them. According to Juniper Research, open bank payments will represent $87 billion in transaction volume in Europe by 2026. Traditional payment methods, such as cards and cash, continue to lose market share and are now expected to account for less than a third of the value of global e-commerce transactions over the same period.
A deep dive into the human element
But a third powerful force behind this explosive growth in open banking payments is often overlooked – and in fact much less talked about and written about – and it’s people.
At the end of every A2A payment is a person. And in the world of payments, success ultimately depends on human factors, such as how consumers perceive and respond to risk, reward, cost, and effort.
That’s why we’ve partnered with Open Banking Expo to deliver a data-driven look at the human element that will fuel the march of open banking payments to the mainstream. Earlier this year, we spoke to over 1,100 consumers in the UK, France, Germany, Italy, the Netherlands and Poland to tackle a seldom-discussed question: who will pay by bank?
The resulting report presents the results of our in-depth analysis of current and potential users of open banking payments. It aims to debunk myths, bust misconceptions, and highlight consumers’ appetite for A2A payments. It highlights the attitudes, preferences and behaviors that shape people’s financial and digital lives, and we hope it will help payment service providers and other ecosystem players adapt to the changing payment landscape in Europe.
Here’s what we found
Almost half (46%) of respondents had made an instant bank transfer in the three months to May 2022, with this figure rising to 67% in Germany.
And it appears the experience has been generally well received, with 81% of consumers likely to make another A2A payment in the future. Unsurprisingly, given the UK’s status as an open banking pioneer, 85% of UK consumers we spoke to will embrace A2A payments in the future.
In another clear sign of growing popularity, instant bank transfers are now among the top five payment methods in each of the six countries we cover.
Our research revealed a wide and growing range of use cases. For example, in Germany and France, 55% of consumers use A2A payments to pay off loans or credit card debt, while 57% in the Netherlands prefer an instant bank transfer to cover subscriptions.
When it comes to buying a car, we found that instant bank payments are now preferred by more than a quarter of consumers in all markets, and almost half in Germany and Italy (47% respectively and 45%). A2A payments are also increasingly seen as a reliable method of sending money to friends and family, with 59% of people in the UK using them for this purpose and 51% in France.
While A2A payments are increasingly associated with online payments, with almost a third (31%) of Polish consumers using the e-commerce payment method, we are also seeing signs of adoption in physical stores, as merchants integrate them with QR codes and other technologies. . Almost a quarter (23%) of respondents in the Netherlands said they use A2A payments for in-store purchases.
So what’s the next step?
In almost every purchase scenario we’ve presented to European consumers – whether it’s a one-time high-value purchase like a car or paying off debt, friends or family – they preferred to pay by instant bank transfer rather than by card. This is huge news for the industry and suggests the pendulum has swung towards open banking payments.
Who pays today by bank and who will do it tomorrow? We found that the highest adoption rates for A2A payments were among consumers in Germany and the UK, particularly those aged 35-44. But the footprint is widening, with the greatest appetite for future A2A payments seen in Poland, France and the Netherlands.
Internet users across Europe are becoming increasingly familiar with the benefits of A2A payments: 58% of people who have used them said they were fast, 56% highlighted their ease of use and 51% emphasized their strong element of security.
In terms of what would make consumers more likely to pay directly from their bank account rather than by card, 59% of respondents said an instant remittance would attract them to an A2A payment, with 37% saying they would choose A2A payments over cards if offered the option to split payments.
As we approach the fifth year of open banking in Europe, these are the kinds of insights players in the payments value chain need to be aware of when looking to adapt their payment offerings to the evolving consumer behavior and appetite in Europe.
Download the “Who will pay by bank” report to learn more
*Jess Gerrow is VP of Marketing at Token