How can open banking payments help crowdfunding platforms?
Crowdfunding platform have a strong incentive to let their investors pay directly from their bank accounts. Bank-based payments via open banking offer a slick alternative to card payments.
Open banking has already proven its value for organisations with similar needs to crowdfunding. Fundraising and wealth management companies are using open banking services to reduce their payment processing and operational costs, as well as improve customer experiences.
It’s important to note that the opportunities provided by this fintech revolution go beyond payments. Our platform, PayBlox, is an end-to-end solution, easing reconciliation by helping companies attribute payments to named account-holders.
What makes bank-based payment methods like Citizen different from other payment methods?
Open banking service providers like us are regulated to access consumer bank accounts directly and ‘push’ funds out of their accounts instantly. We’re integrated with the banks of both our clients and their customers. We’re the only intermediary in the transaction, guaranteeing instant settlement, lower payment fees and a higher level of security.
With card payments, each transaction has to pass through multiple intermediaries, adding to the time taken to settle and the ultimate cost to the merchant. Alternative Payment Methods have already made strides improving on the problems of card payments, and have seen significant user adoption over the last 5 years.
Open banking payments became a possibility in the EU and the UK in 2019, offering customers a payment method unrivalled in its simplicity.
What are the benefits for a crowdfunding platform?
Banking-based payment methods like Citizen are cost-effective, settling instantly with the potential for a much better investor experience.
Open banking transactions do not pass through an expensive chain of processing intermediaries; there’s a single fee, covering the costs of one processor. This disintermediation ensures instant payment settlement as well as an uncomplicated payment flow. Ultimately you’re removing friction for investors while lowering your operating costs — and receiving funds within seconds.
And despite an emphasis on convenience and speed, open banking payments are intrinsically more secure than other payment methods. Security is handled by the consumer’s bank, with payments approved biometrically in the bank’s app.
Not only does this mode of authentication remove the security vulnerabilities of cards, but it also removes the inconveniences of having to deal with card numbers, CVV codes, passwords and PINs. With open banking, nothing has to be retrieved from memory or from a wallet. Open banking payments with a well-designed customer journey are unrivalled in their simplicity.