Open Banking brings major innovations to the banking world. Among them, the payment initiation via Open Banking transfer is a revolution in the world of payments. It completely renews the B2B payment experience.
Joan Burkovic, CEO and co-founder of Bridge powered by Bankin’, hosted 3 experts to talk about Open Banking during the second webinar of our segment dedicated to business management:
– Thierry Leblond, Director of the Electronic Banking and Payment Systems division at PW Consultants,
– Arthur Renaud, accounting ecosystem expert at Qonto,
– Arthur Waller, co-founder and CEO of Pennylane.
How does Open Banking enable the creation of new B2B payment experiences? What are the practical applications in companies? What innovations can we expect in the future? Here is a summary of the discussion.
1. Open Banking transfers, a major innovation in B2B payments
1.1 What is the Open Banking transfer?
Open Banking transfers allow for many innovations in the world of payment, particularly B2B, and in business management in general.
– Open Banking refers to the willingness to open up banking systems and services to third parties in order to better serve the needs of consumers and businesses. In practice, it refers to the ability for regulated players – such as Bridge powered by Bankin’ – to connect to banks in a secure manner, in order to retrieve banking data – with the explicit and informed consent of account holders – in order to offer better services.
– Open Banking transfers is a payment method that can be easily integrated into solutions or software to offer smooth and secure transfer payment services with high added value for customers.
This payment method enhances existing solutions and allows many players to innovate for their customers.
According to a PW Consultants study, the Open Banking transfer is a payment solution that is highly anticipated by the market: 80% of companies and merchants want to use it for e-commerce or B2B payments.
Open Banking transfers are operated by a payment institution regulated by the Banque de France and the ACPR, such as Bridge powered by Bankin’.
1.2 What are the advantages of Open Banking transfers?
The advantages of Open Banking transfers are numerous, starting with those of the bank transfer as a means of payment. It is a secure method, which is carried out in a few clicks by the payer. In essence, the bank transfer is irrevocable, unlike other payment methods.
Open Banking makes the B2B payment experience totally seamless: no need to register the beneficiary’s IBAN on their banking interface before transferring the funds. Open Banking transfers are easily integrated into users’ daily routines: payment is made directly from business management software interfaces, from an email, an invoice, or even from an SMS link.
The reconciliation of transfers on the beneficiary side, for example a merchant, and the logging of payments are fully automated thanks to the dashboard and tools provided by Bridge powered by Bankin’.
Innovations on the transfer as a means of payment, with solutions for multiple transfers, split transfers or deferred transfers, allow to address many use cases.
2. Use cases of the Open Banking transfer
2.1. What are the applications of Open Banking transfers for B2B payments?
How have Pennylane and Qonto benefited from initiating payment via Open Banking transfer?
– Pennylane offers a collaborative platform, which allows company managers to access their financial data at any time. While developing its accounting software, the team quickly realized that reconciling an invoice with a transaction was a complicated step to automate. To solve this issue and make the accounting experience more fluid, there was only one solution: to be at the source, at the initiation of the transfer. Pennylane has therefore developed a platform where the company director can centralize his purchase invoices, scan / take pictures of his invoices and purchase orders and check the relevant invoices to complete transfers. The invoices are pre-entered in Pennylane: amount, due date, etc. The “Pay” button allows you to send payments by batch. Pennylane defines the wording of the transfer for the customer, by integrating an individual parameter. The matching is done with the transaction when Pennylane retrieves the bank information. This allows for reliable, real-time tracking of the payment status of each invoice. Customers save time and get real-time visibility into their payments.
– Qonto is the neo-bank for businesses and freelancers, allowing them to open a business account in minutes and simplify the management of their finances. Qonto’s goal is to make it easier for its customers to pay and get paid, by offering a much better experience than traditional banks. In order to offer more innovation to its customers, Qonto has been very quick to rely on the development of APIs. As a native open bank, the neobank focuses on the customer’s needs. With the Open Banking transfer, this means making batch transfers available directly in the Qonto interface, but also by offering it as an API to its partners, so that customers can benefit from it in the interface they prefer.
– Qonto – Bridge – Pennylane: the three companies have developed a seamless and integrated B2B payment path to meet the needs of corporate customers and accounting users.
– Pennylane retrieves the invoice and pre-enters the transfer details. By clicking on “Pay now”, Bridge powered by Bankin’ takes over and provides a final view of all the transfer details. Bridge powered by Bankin’ then sends the transfer order to Qonto. Qonto initiates the transfer and the message comes back to Pennylane: the invoice’s status is now “in progress”. As soon as the bank information via Qonto is returned on the past payment, the invoice is reconciled with the transaction and goes into paid invoices. Bridge powered by Bankin’ is the bridge between Pennylane and Qonto.
2.2. What are the expected future applications of payment initiation via Open Banking transfer ?
Among the expected use cases, which affect the Open Banking transfer for a better payment experience, we can note :
– Companies want to go all the way to digitalization in the payment experience. Today, there are breakpoints that require manual intervention, both on the collection and settlement sides. This concerns in particular the possibility of making an instant transfer on the due date, but also payment by fractional transfer.
– The creation of a fluid payment process, involving the various stakeholders who intervene in this process. Often, the person who validates the transfer is not the same person who enters it. So we need to ensure that the experience is seamless from start to finish.
– The development of request-to-pay, a complementary service to instant payment. It is defined by the European Payments Council in 2020 and will be gradually implemented by the end of the year. This messaging service allows a creditor to request a payment from his debtor. The beneficiary defines settlement preferences (payment due date) and sends the payment request to the payer, who in turn receives the information and makes his choice (date of validation of the request, payment deadline). This allows companies to obtain visibility on their cash flow.
Payment initiation via Open Banking transfers renews B2B payment methods and allows for better customer service. Want to be at the forefront of innovation and create new B2B payment experiences? Come and talk to us.