As more customers have turned to digital channels to manage every aspect of their lives, they have experienced a poor payments experience and service.

The problem is cards. They were not built for a digital-first experience and have been retrofitted into current online payment flows. Newer approaches such as Google Pay or Apple Pay paper over those cracks but don’t change the fundamentals.

Open Banking is digitally native and mobile first by design. Bank to bank payments move money at a fraction of the cost, securely and conveniently, while also delivering a vastly better consumer experience. It’s a huge win for merchants too, with a higher conversion rate than cards, with near instant settlement and all at a lower cost.

The introduction of Strong Customer Authentication (SCA) in 2021 adds another layer of friction to cards with workarounds that deliver a poorer customer experience. With open banking payments, authentication is integrated in the payment flow, often with the consumer using biometrics such as fingerprint or face ID to identify themselves in their banking platform.

There is a huge opportunity for banks to improve the experience, removing legacy card infrastructure and move money at a fraction of the cost, more securely and with an higher level of consumer experience and convenience.

Cards have had their time. 2021 will be the year the future of open payments architectures powered by open banking capabilities comes into their own. We will see significant investment in innovative payments products and services built on top of open banking, driving further adoption, for a better user experience.

* by Francesco Simoneschi, CEO of TrueLayer