The adoption of open banking payments reached a record high in July, according to the latest figures from Open Banking Limited. With a total of 11.4 million payments made last month, there was a significant increase of 9.3% compared to the previous month and an impressive 102.4% increase compared to the same period last year.
The Significance of Open Banking
Marion King, the chair and trustee of Open Banking Limited, described this doubling of payments as a remarkable achievement and a testament to the transformative impact of open banking. Open banking plays a pivotal role in driving financial inclusion, innovation, and consumer empowerment. It has revolutionized the way people make payments and has paved the way for a more accessible and efficient financial ecosystem.
The surge in open banking payments can be attributed to the increasing number of institutions that offer ‘pay by bank’ options to their customers. Notable examples include NS&I and Hargreaves Lansdown. One-off domestic payments, such as account top-ups, bill payments, and eCommerce purchases, accounted for the majority of open banking payments, with 10.5 million transactions last month, making up 92% of the total volume.
In addition, variable recurring payments experienced a significant growth of 28.7% month-on-month, totaling 872,000 transactions in July. However, it is important to note that while the use cases for open banking payments are expanding, they still mostly revolve around account top-ups and credit card payments, with minimal diversification.
Potential for Growth
Siamac Rezaiezadeh, VP of product marketing and insights at GoCardless, highlights that although open banking payments have reached a record high, they have a long way to go when compared to the billions of payments processed yearly through direct debit and card systems. This indicates that there is still significant room for growth in the adoption of open banking payments.
While cumulative figures for the year-to-date were not shared, it is highly likely that open banking payments have surpassed the total number of payments made throughout the entirety of 2022. This suggests that the upward trajectory of open banking payments will continue, further transforming the financial landscape and providing greater convenience and accessibility for consumers.