One in five Brits are now making regular payments via Open Banking according to new research carried out by Moneyhub.
While cards remain the dominant payment method on the high street and online, businesses are exploring alternative options for their customers, often triggered by high acquiring costs and settlement delays which are impacting cashflow.
The stranglehold that direct debits overwhelmingly have in the regular bill payment sector (where 70% of Brits use this payment method for their regular bills) is also set challenged as Open Banking’s variable recurring payments become an option.
Moneyhub’s research comes following figures showing that Open Banking payments hit a milestone earlier this year, reaching 11.78 million transactions in September, with the number of active payment users surging by 68.2% in July 2023 compared to the same month the previous year. Open Banking payments have become increasingly popular in the last 12 months, allowing users to make payments directly through their phone’s banking app or online banking account straight to another account.
In particular, younger generations have led the shift with 29% of 16-24 year olds and 26% of 25-34 year olds now making payments using Open Banking, the research found. In comparison, just 13% of those aged over 55 years old are using the payment method. Furthermore, close to half of those that classed themselves as full time students are using Open Banking to make regular bill payments.
Speaking on the findings, Mark Munson, MD of Moneyhub’s Payment Division said: “The world of payments is constantly evolving, and the Smart Payment revolution that Open Banking enables is set to shake up how we manage our regular bill payments. Fifty years ago we would have seen payment by cheques or cash as the predominant tool to pay for bills, then direct debits and standing orders grew into popularity.
“Now, Open Banking is set to join the fold. Quicker, more efficient, offering greater flexibility and largely more cost-effective for both the merchant and customer, Open Banking payments are readily being embraced by a new generation of consumers.
“With new, innovative and more flexible propositions coming to market, Open Banking has demonstrated that early adopters of those services, not only demand a greater choice in what they are buying, but how they are buying it. They are not wedded to payment solutions that are of their parents, or grandparents generation.”