Three ways Open Banking can benefit travel money businesses

Open Banking is shaking up the fintech and payments world, no doubt you've heard of it. It's a framework that enables banks and financial institutions to securley share financial data with other regulated providers in order to create more personalised services and value for consumers and businesses alike. 

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

Why should travel money businesses evaluate Open Banking payments?

Year-on-year the number of Brits taking holidays abroad is increasing, according to Yonder, 57% of consumers said they would take an overseas trip despite the cost of living pressures last year. When travelling, budgets are also increasing as, according to Travel Weekly, almost half (46%) of Europeans have increased their travel budgets compared to pre-pandemic. 

But as consumers plan more trips and spend more on travel, there is an increasing demand for quick, cost-effective travel money experiences. As consumers search for the best exchange rates with the quickest delivery, travel money businesses need to offer their customers the best rates, speedy delivery and seamless payment experiences to stand out from the competition. Unfortunately, for a lot of travel money businesses payments are a constant headache as high-cost card fees eat into profits, while slow settlement and clunky payment experiences impact customer experiences and real-time exchange rates. Here are three ways Open Banking can benefit travel money businesses and their customers.

1. Reduced transaction costs

Cutting costs has never been more important. Relying on traditional payment methods is making it increasingly difficult for travel money businesses to save, with costs anywhere up to 3.5% fees on card transactions.

Open Banking powered account-to-account payments allow travel money businesses to bypass the high-cost transaction fees associated with cards, as the payment goes straight from the consumer’s bank account to the business’ account within seconds. Depending on card fees, Open Banking payments can save travel money businesses huge percentages on processing fees. This results in significant savings and the ability to continue to offer customers the best and cheapest rates.

2. Increase cash flow with instant settlement

Slow settlement impacts travel businesses, as they compete to offer real-time exchange rates, while grappling 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 around on the same day and keep a grip on real-time cash flow and exchange rates.

3. Boost conversion with cardless payment experiences

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

Open Banking can also increase customer sentiment by improving the process when buying back customers’ travel money. 70% of consumers surveyed by Vyne  said instant refunds would be important to them if they could build their ideal payment method. This poses a problem for a lot of travel money businesses that use traditional methods which don’t have the capacity to offer rapid, instant refunds. Card payment refunds can take up to five days to land in customers accounts, and for digital wallets, often longer. 

Payments made through Open Banking can be refunded instantly, meaning customers can receive their travel money refund in a matter of seconds. For travel money businesses this enhances 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 utlising Open Banking payments now? In July 2023, it was reported by Open Banking Ltd that Open Banking payments hit an all time high with more than 11.4 million payments processed in one month. The number of active payment users also reached 4.2 million, an impressive 68.2% surge 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 are ever increasing, Open Banking technology has evolved and established a robust ecosystem and in turn, more consumers than ever are demanding instant payment experiences.