GoCardless launches fully integrated open banking service
GoCardless, the London-based online Direct Debit specialist that manages the entire collection process for merchants, has launched its fully integrated open banking payments solution across all features of its worldwide platform.
According to reports, the Instant Bank Pay will provide merchants with an economical solution for instant payments collection, to push back the dominance of cards for one-off payments.
GoCardless first announced its open banking strategy in December 2020 following a US$95m capital injection in a Series F round that boosted the company’s valuation to $970 m.
Currently, GoCardless serves 60,000 merchants and the much anticipated introduction of Instant Bank Pay will enable the fintech to expand its offering into the adjacent e-commerce market, where it will take on one-off and ‘card-on-file’ payments.
Fintech open banking
GoCardless’s own data suggests that, 85% of merchants with this business model often need to collect additional one-off payments outside of a customer’s regular payment schedule. The new Instant Bank Pay solution manages this for businesses with recurring revenue payments.
The open banking solution offers greater flexibility and lower costs compared to bank debit. This is not appropriate for one-off payments because it doesn’t offer merchants with instant visibility of payment authorisation. But bank debit has resulted in merchants relying on high-fee card payments or time-consuming bank transfers to make the payments.
Speaking about the news, Hiroki Takeuchi, co-founder and CEO of GoCardless said, “We’ve specialised in bank-to-bank payments for over 10 years, with bank debit as the primary payment method. And while it provides many advantages to consumers and businesses, speed of payment authorisation is a drawback.”
He continued, “Instant Bank Pay addresses this by giving merchants the best of both worlds. Open banking will provide instant confirmation of payment authorisation, enabling them to have immediate visibility of their one-off payments, and bank debit will continue to offer the cash flow, cost and retention benefits they have come to expect.”
Takeuchi added, “By enabling businesses to take any kind of payment through GoCardless, we can challenge the dominance of cards and move beyond collecting subscriptions, invoices and instalments. The launch of this open banking feature means we can now serve any merchant, regardless of whether they have an ongoing or one-off relationship with their customers.”
Open banking has proved popular with merchants and consumer interest in open banking is also on the increase. One study found that 63% of UK customers would be willing to try new online pay options if they offered more secure transactions.
Fintech Timeline: Tink’s acquisition by payments leader Visa
Tink was founded in Stockholm, Sweden. The company’s integrated, API-based approach was soon met with widespread acclaim for its ability to enhance the customer experience, streamline payments and increase financial transparency.
Through its technology, users can access aggregated financial data, utilise smart finance tools (risk insights, account verification, etc.), and create personal finance management solutions. Tink had become an early leader in a trend still gaining momentum today: Open Banking.
2014 to 2017
The fintech’s Series A, B, and C rounds netted $4mn, $10.2mn, and $14mn respectively. In a short span of time, Tink had already elevated itself to being one of Europe’s leading Open Banking platforms.
- 400 employees
- Serves 18 markets
- Covers over 3,400 banks
- Customer reach of more than 250 million
2018 to 2019
Tink democratised API by launching a platform specifically for developers. This empowered third-parties to create next-gen products for customers.
Furthermore, Tink consolidated its leading position in Europe with expansions in Italy, Portugal, and Spain, as well as appointing former Stripe employee Rafael Plantier as its Country Manager of UK & Eire.
Despite the COVID-19 pandemic, Tink managed to maintain the momentum of the previous year and secured an additional $213mn from two venture capital rounds in January and December.
In May, Tink joined forces with American Express as the latter entered the European Open Banking market. This news was exciting in and of itself, but it paled in comparison to the surprise development on 24 June that Visa had signed an acquisition agreement for the sum of $2.15bn.
“Visa is committed to doing all we can to foster innovation and empower consumers in support of Europe’s open banking goals,” said Al Kelly, CEO and Chairman of Visa. “By bringing together Visa’s network of networks and Tink’s open banking capabilities we will deliver increased value to European consumers and businesses with tools to make their financial lives more simple, reliable and secure.”
“For the past ten years we have worked relentlessly to build Tink into a leading open banking platform in Europe, and we are incredibly proud of what the whole team at Tink has created together,” added Daniel Kjellén, CEO and Co-Founder of Tink.
“Joining Visa, we will be able to move faster and reach further than ever before. Visa is the perfect partner for the next stage of Tink's journey, and we are incredibly excited about what this will bring to our employees, customers and for the future of financial services.
Pictured (left to right): Daniel Kjellén (CEO) and Fredrik Hedberg (CTO)