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. 

Payment authorisations

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.