Open banking has taken the payment industry by storm in recent years. Global open banking is expected to become a $19.14 billion market by the end of 2022, growing at a compounded annual growth rate of 26.5%. Adam Clarke, who founded Macropay in 2013 and is heading the company as CEO, is also bullish on the future of open banking.
“I think there are a number of industries that are not correctly supported by card schemes at the moment, which of course has the majority of transactional volume worldwide to date,” according to Clarke, and it is driving the growth of open banking.
What is Open Banking?
Open banking is the process of providing access to banking data to third-party financial services providers. It allows fintech companies to leverage the swamp of banking data in creating innovative payment and other financial services and products.
As pointed out by Adam Clarke, the drawbacks of the existing card schemes are driving the popularity of open baking. Some markets are already being dominated by open banking-based alternative payment methods, like iDEAL in the Netherlands, which covers 60% of the local market. However, Visa and Mastercard-centric countries, like France, are lagging behind.
“I think countries that are typically leaning towards alternative payment methods are open to receiving new and better alternatives by their nature,” said Clarke, who entered the open banking space witnessing the “tremendous uptake and successful payment flow within the Swedish market.“
“The demand we have… specifically within Sweden, given the complexities that our clients face accessing the Swedish market, I can tell you that the growth projections we have ahead are significant.“
Open banking-backed alternative payments simplify the payment process for customers. It also adds an extra layer of security.
“The end customer needs to provide fewer data to execute a payment, so there is less risk involved in making an open banking payment, as opposed to using other methods such as card schemes,” Clarke explained. “I think it is good for the general public to be made aware that they actually have a choice in how they pay and how that might impact them from a security standpoint.“
“So, if they are using a traditional card, the transmission of data involves far more risks. If they are making an open banking payment, the risk decreases significantly.“
However, the advantages of open banking are not limited to consumers. Merchants, who usually pay hefty fees by accepting credit and debit cards, also benefit from alternative payment methods.
“The reality, or the elephant in the room, is that traditional payment methods, specifically card schemes, have become increasingly biased on the favor of the end customer and have completely forgotten the importance of the actual business and their needs,” Adam Clarke added.
“And I think, as a result of that, we will see, as the years go on, transactional volume migrating from those card schemes into open banking.”
Macropay for Open Banking
Macropay offers an easy-to-comprehend open banking flow to our customers. Our integrated services make it easier for consumers to use and access the banking resources of their choice.
To know more about our offerings and services, reach us at [email protected].