GoCardless, a leading fintech for bank-to-bank payments, has today launched Instant Bank Pay, a new open banking feature directly integrated into its global payment platform. With Instant Bank Pay, merchants can take instant, one-off bank-to-bank payments from new and existing customers while still reaping the benefits of bank debit for their recurring payments.

The announcement marks the first milestone in GoCardless’ journey to accelerate its open banking strategy, for which it received $95m in funding at the end of 2020. By combining open banking technology with its existing global bank debit network, GoCardless can offer its 60,000 merchants a new low-cost, seamless and convenient way to collect instant payments that works for any revenue model.

“We’ve specialised in bank-to-bank payments for over 10 years, with bank debit as the primary payment method. And while it provides many advantages to consumers and businesses, speed of payment authorisation is a drawback,” said Hiroki Takeuchi, co-founder and CEO of GoCardless. “Instant Bank Pay addresses this by giving merchants the best of both worlds: open banking will provide instant confirmation of payment authorisation, enabling them to have immediate visibility of their one-off payments, and bank debit will continue to offer the cash flow, cost and retention benefits they have come to expect.”

With the introduction of Instant Bank Pay, GoCardless will expand its offering into the adjacent e-commerce market, where it can take on both one-off and ‘card-on-file’ payments.

Takeuchi added: “By enabling businesses to take any kind of payment through GoCardless, we can challenge the dominance of cards and move beyond collecting subscriptions, invoices and instalments. The launch of this open banking feature means we can now serve any merchant, regardless of whether they have an ongoing or one-off relationship with their customers.”

While it can be used in many scenarios, Instant Bank Pay addresses an issue that is particularly acute for recurring revenue businesses: according to research from GoCardless, 85 per cent of merchants with this business model have a need for collecting additional one-off payments. Examples include making a first payment when setting up a bank debit (e.g. signing up for a gym membership), purchasing additional goods or services, or topping up an account outside of a customer’s regular payment schedule. 

Bank debit is not suitable for one-off payments because it doesn’t provide instant visibility of payment authorisation. This has forced many merchants to turn to card payments, often with high fees attached, or time-consuming manual bank transfers. Instant Bank Pay is a fast and easy way for customers to make a one-off account-to-account payment. Instant confirmation provides better visibility of payments, eliminates costly credit card fees, and reduces late payments thanks to a seamless payer journey.

Broadband provider Cuckoo used Instant Bank Pay as part of an early access programme to collect first and ad hoc payments for new and existing customers. During the pilot, two-thirds (66 per cent) of customers who experienced a failed payment were able to benefit from using Instant Bank Pay. Of those, 86 per cent were able to make a payment within 48 hours, minimising disruption to their service. Furthermore, before Instant Bank Pay the process of chasing and collecting a failed payment could take 21 days; using this feature Cuckoo has the capability to reduce this to just seven days.

Alexander Fitzgerald, Founder and CEO at Cuckoo, said: “We're taking on a broken broadband industry with simple pricing, fair contracts and exceptional service. The payment process plays a vital role in our mission and working with GoCardless means our customers have a seamless payment experience when switching to us and paying their monthly bill. 

“We’re excited to continue using Instant Bank Pay for one-off payments. Not only will it prevent our customers from losing access to our services, it’ll also help reduce the time we spend chasing late payments and the risk of costs outstanding.”

Merchants can build the Instant Bank Pay option straight into their checkout flow or simply send a payment request with a link to pay. Similar to a mobile wallet payment, payers are seamlessly connected to their bank, and can authorise a payment directly from their bank account in just a few clicks.