Opinion

What does Open Banking mean for the future of wholesale?

Rob Mannion is the founder of b2b.store

Open Banking enables wholesalers to accept payment via bank transfer, and is an extremely secure means of payment, offering two principal advantages compared with debit, credit or corporate credit cards.

Firstly, it is much cheaper when compared with the cost associated with processing payments from cards.

Secondly, payments are received quicker, with payments arriving in bank accounts within seconds, compared with two-tofour days for card payments.

It can be incorporated into various areas of your business, offering an enhanced audit trail of when payments are made and by whom. Payments can be associated with specific invoices, reducing the overheads associated with reconciling accounts, while finance teams can be notified via email when payments have been made, by whom, and to which invoice it relates – further reducing costs and increasing green credentials.

For wholesale businesses, Open Banking adds most value as a replacement for card payments. Think of the process in terms of a roadmap or journey, which may look something like this.

1: E-commerce

This is relatively straightforward. You need to have an accounts section within your e-commerce where customers can see what they owe, and view previous invoices.

Once these features are enabled, you are able to integrate an Open Banking capability that enables customers to pay off balances or invoices. Enhanced functionality can also be introduced, such as deploying the ability to pay off multiple invoices.

2: Invoices

QR codes can be automatically added to customers’ invoices. When customers scan the QR code, their banking app opens and the value of the invoice is auto-populated in the app.

The recipient’s banking details are also entered automatically. All your customer has to do is click ‘send’ and the money arrives in your account.

In parallel, your accounts team receives an email stating that monies have been received, who the sender is and which invoice the payment relates to.

3: In-depot / delivered

Accepting payments in depot and at the point of delivery becomes more challenging, as they are processed in real-time and often in full view of other customers.

Here, a real-time connection between Open Banking and your bank is needed so that as soon as the payment has landed – which should take milliseconds – your staff are notified that the transaction is then complete.

4: Automated accounts

The receivables process is often slow and clunky, managed by internal resources and with the added challenge of the majority of payments being made on account.

Open Banking can add significant value when requests for payment are incorporated into automated digital notifications sent to your customers, based on the specific payment terms of an invoice or account. l