Online payments are expensive – directly for merchants and indirectly for consumers as the price is obviously higher due to the merchants having a ~3% cost of payments. But in a world where I as a consumer could pay you as a merchant directly from my phone if you simply gave me your sort code and account number (and you would get the funds immediately rather than with a considerable delay), in a world of Open Banking and APIs can this simple model not be automated and provide the same functionality online to all customers?
It turns out it can and Banked are leading the way of so-called direct-payments. These have many benefits not having been designed in the days when a plastic piece of card with some simple numbers on them was what amounted to account security.
If this is the schematic than as always one needs to understand that traditional credit card payments do but just provide payment but a whole host of features around them. What if eg the credit card used to buy something from your store was stolen? What if you the consumer receive the goods having paid but the goods are substandard.
As always with payments the high-level schematic is simple yet the devil lies in the detail.
Topics discussed include:
- why move to the UK from Australia?
- shall we all move Fintech to the Isle of Man where they have given up stupid micromanaging bureaucratic restrictions completely
- eroding London’s competitive advantages if we are not careful
- Brad’s career journey which led him to Banked
- taking on BHAGs – disrupting the global payments space?
- the need to re-engineer processes and step-out of ancient design decisions before teching it up
- cf propeller airplanes and jet airplanes – at some point incremental improvement is not longer enough – “now for something completely different”
- the importance of starting with beachheads – cf D-Day Normandy beaches rather than invading the whole of Europe at the same time
- Banked has connected via APIs to every UK Bank and is now expanding across Europe
- an example of charities getting money immediately fee-free compared to 2+% and getting the funds ten days later
- how the current payments system work if you set up as a merchant online tomorrow
- challenges with the current model
- card readers to direct payments from a mobile phone – the many many benefits that can arise from this
- smarter bank statements
- the whole chain of players that get paid by the credit card payment chain
- two types of payment rails – credit card payments and direct payments bank-to-bank – the opening up of this via open banking/psd2
- how the Banked solution works – you click on the Banked button and the payment arises on your mobile banking app which asks you to authorise your payment
- the simplicity of this process
- this all being protected by your phones biometric security as opposed to a 3 digit number on the back of a card
- Banked have to verify merchants – a process that costs as well as insuring against failures/fraud – net net there remains an insurance piece and hence non-zero costs
- Banked sell access to a developer console to enable devs to connect easily to all the banks in the UK – cf Go Cardless with direct debits
- incentivising consumers to use one payments mechanism or another
- Banked are in the UK and Ireland
- their future plans
And much much more 🙂
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