Coronavirus opens new doors for open banking

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At the start of 2020, the overriding security concern when it came to payments was fraud. After all, before the days of the global coronavirus pandemic, no one had really viewed hygiene as being a particular selling point.

But amid the climate of fear and upheaval created by COVID-19, point of sale card terminals are now viewed as potential sources of infection, creating a new source of opportunity for open banking entrepreneurs.

“Using a PIN pad is equivalent to 100 handshakes,” said Lubin Reyes, CEO of U.K.-based open banking start-up Rapay. “It’s a very contaminated touchpoint, and because of this coronavirus outbreak, people don’t actually want to press a PIN pad anymore.”

Open banking apps — such as those offered by Rapay and other U.K. start-ups such as Zotto and Thyngs — provide a mechanism whereby customers can access their bank accounts through a third-party fintech, such as one that displays a unique QR code on their phone, which linked to their bank. Crucially in a world reeling from coronavirus, it means there is no need to physically touch a payment terminal.

“Using a PIN pad is equivalent to 100 handshakes,” said Lubin Reyes, CEO of U.K.-based open banking start-up Rapay.

This unique aspect of open banking payment offerings has even attracted the attention of powerful political figures.

“The world is changing,” Paolo Zampolli, an ambassador of Dominica to the U.N. and confidant of U.S. President Donald Trump, told PaymentsSource. “Nobody wants to touch anything. I had an argument with my wife, because she went to the grocery store and she wore a mask, gloves, but she still paid using card and pin, and I said to her, ‘What is wrong with you?’ And then I heard about these new open banking businesses and I was like, ‘Wow, this is what we need!’”

When coronavirus cases first began to accelerate in the U.K. in mid March, Reyes said he suddenly found himself being contacted by curious vendors, ranging from high-end restaurants to boutique stores, all wanting the new technology.

“I was never expecting to go down that route,” he said. “Open banking has been around for two years but it hasn’t really been offered to people on the high street. I launched Rapay with the sole idea that merchants in the money services sector would be able to process funds much quicker … but then coronavirus happened, and it was like, ‘Hold on a minute, everyone’s going to want this.’”

However, such plans are temporarily on hold.

Following the U.K.’s lockdown on March 23, high street businesses have been forced to abandon any plans to adopt the technology until the government announces an exit strategy, but in the meantime clients in Reyes’ original target market are going ahead.

Remittance company BP Remit is one of the first companies to implement Rapay’s open banking technology, initially online and then in their branches when lockdowns cease.

“I jumped on it immediately because I knew this is going to be the accepted way of doing things going forward, and I would rather be ahead of the curve than behind the curve,” said David Zulch, CEO of BP Remit. “We’re in a very competitive market. We compete against some large companies that have been in this game a lot longer than we have, and the only way we can compete is on customer services, in terms of the payments environments that you offer.”

Zulch explained that he had initially been intrigued by open banking due to the commercial advantages of receiving funds much faster. However, he predicts that the changes in public behavior induced by the coronavirus pandemic will make it a necessity for more companies to offer touchless payments going forwards.

"For our customers, the technology has now become imperative as when we get out of this crisis; it’s not going to be a case of going back to normality," he said. "People are still going to be very conscious of their health security, and how they’re doing things. So we’ve scrapped a whole lot of projects to make sure that this gets implemented first.”

For Reyes, he is convinced that the crisis is going to open up an entirely new frontier in the way many businesses process payments.

“People will be reluctant to even touch money when this is all over,” he said. “Money is doomed, and this is where the open banking scenario can work.”

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Coronavirus APIs U.K. Mobile payments Point-of-sale