Three ways open banking can benefit travel money businesses

Open Banking is shaking up the fintech and payments world, no doubt you’ve heard about it. It is a framework that enables banks and financial institutions to securely share financial data with other regulated providers to create more personalized services and value for both consumers and businesses.

With Open Banking payments, businesses are paid quickly, securely and at a lower cost. While consumers pay through their own mobile banking or online banking app, eliminating manual entry of card details and the associated risk of fraud.

Why should a travel money business value open banking payments?

Year-on-year, the number of Britons holidaying abroad is increasing, according to Yonder, with 57% of consumers saying they would take a trip abroad despite cost-of-living pressures last year. When you travel, budgets also increase, as almost half (46%) of Europeans have increased their travel budgets compared to pre-pandemic, according to TravelWeekly.

But as consumers plan more trips and spend more on travel, there is a growing demand for fast, cost-effective travel experiences with cash. As consumers look for the best exchange rates with the fastest delivery, travel money businesses need to offer their customers the best rates, fast delivery and seamless payment to stand out from the competition. Unfortunately, for many travel cash businesses, payments are a constant headache as high card fees eat into profits, while slow settlement and inconvenient payments impact the customer experience and real-time exchange rates. Here are three ways open banking can benefit travel money businesses and their customers.

1. Reduced transaction costs

Reducing costs has never been more important. Relying on traditional payment methods is making it increasingly difficult to save money on travel with costs anywhere up to 3.5% in card transaction fees.

Account-to-account payments powered by Open Banking allow cash-on-the-go businesses to bypass expensive card transaction fees as the payment goes straight from the consumer’s bank account to the business’s account in seconds. Depending on card fees, Open Banking payments can save businesses up to 80% on travel money processing fees. This results in significant savings and the ability to continue to offer customers the best and cheapest prices.

2. Increase cash flow with instant settlement

The slow settlement is affecting travel businesses as they compete to offer real-time exchange rates while struggling with transactions that can settle up to three days later.

With Open Banking, payments land in the business account within seconds, allowing travel money businesses to turn cash the same day and control cash flow and exchange rates in real time.

3. Increase conversion with cardless payment

Time is money in today’s fast paced world. Customers demand fast and instant experiences online, and if something slows them down, they go to a competitor. With Open Banking, the payment journey is streamlined by removing unnecessary friction, such as manually entering card details. Instead, customers make payments with bank-level security using their mobile banking or online banking app with just a few taps, eliminating the need for cards or manual data entry.

Open banking can also boost customer sentiment by improving the process of redeeming customers’ travel money. 70% of consumers surveyed by Vyne said instant refunds would be important to them if they were able to create their ideal payment method. This creates a problem for many travel money businesses that use traditional methods that do not have the capacity to offer quick and immediate refunds. Refunds for card payments can take up to five days to land in customer accounts, and often longer for digital wallets.

Payments made through Open Banking can be refunded instantly, meaning customers can receive their travel refund within seconds. For businesses with money to travel, this improves their proposition, improves customer sentiment and encourages return customers.

Open Banking has grown by 104% in one year

So why should travel money businesses consider using open bank payments now? In July 2023, it was reported by Open Banking Ltd that Open Banking payments reached an all-time high with more than 11.4 million payments processed in a single month. The number of active payments users also reached 4.2 million, an impressive jump of 68.2% from July 2022. Open banking is growing at a rapid pace, driven by early adopters in retail, e-commerce, gaming and financial services . While card processing fees continue to rise, open banking technology has evolved and created a robust ecosystem, and in turn, more consumers than ever are demanding instant payments.

Now is the time for travel money businesses to explore alternative payment options that can help reduce transaction costs by 80%, improve cash flow with instant settlement and increase conversion through cardless payment. Travel Money businesses such as TravelFX are already benefiting from the addition of open bank payments to their online checkouts; 55% of TravelFX customers choose to pay with a payment option powered by Open Banking, Vyne Pay with Bank. TravelFX also found the reduced transaction fees through Vyne to be a “huge benefit” as they are able to “absorb costs” and offer customers the best and cheapest fares while “maintaining operational efficiency” , as Vyne Pay with bank transactions settle within seconds.

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