A week ago, BNY Mellon announced a strategic alliance with Trustly called Bankify, an Open Banking Payments solution that allows businesses to receive guaranteed payments from consumer bank accounts. This partnership represents a perfect marriage of trusted expertise, with BNY Mellon being America’s longest-standing bank, and change-making innovation provided by Trustly’s success in Open Banking. Together, the two can adapt a decades-old payment structure, consumer-to-business payments, to be more convenient for consumers and cost-efficient for businesses.
Collaboration for Innovation
Open Banking Payments are payments made when consumers share financial account data with third parties to make payments with their bank account. While still in its infancy in the U.S., Open Banking Payments have gained traction worldwide; Juniper Research has found that global Open Banking payments transaction values will exceed $330 billion by 2027.
The tremendous growth is partly due to the consumer’s increasing comfort and trust in the payment method. Merchants are also keen on cost-savings: card acceptance costs amounted to over $160 billion in total fees for merchants in 2022 and are expected to continue to grow annually with no end in sight. Open Banking Payments serve as an opportunity for businesses to circumvent those increasing swipe fees.
The success of Open Banking Payments, however, is intrinsically linked to consumer adoption, and widespread consumer adoption depends on the successful collaboration between Open Banking providers and the larger financial ecosystem, including banks. When banks and Open Banking providers work hand-in-hand, the long-standing bank/customer relationship becomes stronger because the customer is equipped with new tools that allow them to take control of their financial data and spend responsibly.
The alliance between BNY Mellon and Trustly represents a mutually beneficial partnership that will redefine the norm for consumer-to-business payments. As an area largely dominated by cards, Open Banking Payments will allow BNY Mellon to equip its clients with a cost-efficient alternative: guaranteed payment options that help balance payment acceptance with the risk of chargebacks. The customers of BNY Mellon clients will enjoy payment flexibility when paying bills, adding funds to digital wallets, and more.
The Next Stage: Adoption Breeds New Use Cases
As mentioned, this partnership represents a key ingredient for Open Banking success: consumer adoption. As more merchants recognize the value that Open Banking will bring to their business, more consumers will adopt the payment method for everyday transactions.
How the momentum will start isn’t dependent on one industry or implementation but rather on the consumer who decides to use the solution for different types of transactions. A consumer might first use Open Banking to enhance their bill payment experience, for example. Then, they might decide to add funds to a digital wallet to fund an investment account using Open Banking. This domino effect will continue over the next few years, revolutionizing everything we know about payments.