BUSINESS FOCUS
PAY IT FORWARD
Serious bottom-line benefits for merchants are on the cards, or, rather, not on the cards, as Fiona Russell Horne finds out.
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hat has increased in cost by 1000% in the last six years, and affects every UK business whose customers pay for their
goods using small pieces of plastic? Since 2018, the charges levelled upon businesses by payment card providers Visa and Mastercard have risen so high that they form a significant line in merchants’ P&L accounts. There is an alternative though, and that is Open Banking.
Mike Mann, finance director at plumbers’ merchant chain Williams, is a man on a mission. A mission to get Open Banking more widely used across the merchanting sector, and reduce the amount of money that is being wasted on card fees. He says that it now costs Williams more than £1m a year to take Visa and Mastercard, and
that’s more or less the cost of running four branches. It’s not as though there has been a corresponding up-tick in service quality either. “It still takes between two and six days for the money paid by our customers via their cards to get to us.”
He adds: “In 2016, the CMA investigated the UK banking scene and decided that too much was being charged, that the banks were too inflexible over a number of things, and that their act needed to be sorted out. One of the things that was enacted was the requirement for a very cheap, instant payment method. That’s where Open Banking started.” Essentially, it’s an account-to-account payment system that is quicker and more secure than paying by credit or debit card. “Though it was originally conceived of as an ecommerce idea, most of our payments
happen in branch, so we wanted something that was a point-of-sale product,” Mann says, adding that the company worked with Payit, part of NatWest Bank, and payment systems provider PaybyLink BV, to develop a system that Williams’ customers could use to make payments on the website, or to pay their monthly account, and also for one-off purchases in branch. “Every time they do that, rather than taking card out, we save a small fortune.”
The premise is simple, Open Banking allows a merchant to request a payment from a customer, who simply needs to open their banking app and approve the transaction. Mann explains that it’s a system that is familiar to customers. “The benefit for our customers is that it is a more secure payment method, as details don’t need to be shared with
www.buildersmerchantsjournal.net March 2024
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