CM MARCH 2022

NEWS ROUNDUP
Open Banking could save SME online
retailers thousands in wasted fees
THE average SME online
retailer could save an
estimated £19,000 by
reducing transaction fees
associated with popular
payment providers such as
AMEX, Mastercard and Visa through the
adoption of Open Banking technology.
At present, small online retailers in the
UK process approximately 217 sales a day
– increasing by 24.0 percent if that retailer
also happens to have both an online and
in-person presence. On average, retailers
pay a transaction fee of approximately
1.8 percent across all different payment
types, with the highest charges found in
Buy Now, Pay Later payment methods (3.2
percent) and debit cards (three percent).
Even taking into account just the
most popular payment providers (AMEX,
Mastercard and Visa) the average small
business will spend more than £22,000
a month on transaction fees, costing the
entire industry an estimated £66 billion
every year.
“Open Banking technology
can provide solutions
which alleviate common
financial stressors on
these businesses and allow
them instead to focus their
spending on strategies to
improve growth.”
Yolt, one of Europe’s leading Open
Banking providers which provided the
data, claims that the adoption of Open
Banking technology could significantly
reduce these costs, as it does not utilise
commission-based transaction fees,
providing lower and more predictable
costs to the retailer. It believes this could
save the average SME online retailer
approximately £19,000 a month.
Nicolas Weng Kan, CEO of Yolt, says
small retailers are still finding their feet
and recouping losses after the pandemic:
“Open Banking technology can provide
solutions which alleviate common
financial stressors on these businesses
and allow them instead to focus their
spending on strategies to improve growth,”
he says.
Open Banking could also assist SME
retailers by alleviating other pressures on
their business. On average SME retailers
spend 18 hours a week processing
refunds, for instance. At present, it takes
nearly three days to settle these with a
payment provider. However, Open Banking
technology can make these refunds
instant.
A third of SME online retail
businesses (34 percent) also
experienced fraud in the
last year including supply
chain fraud (64 percent),
authorised push payment
fraud (42 percent),
account takeovers (40
percent) and cyberattacks
(30 percent)– losing an average
of £4,257 a year. With the introduction
of Open Banking technology, many of
these incidents of fraud could be avoided,
providing further savings to recovering
SMEs.
Elsewhere, TotallyMoney, the credit
app focused on the ‘under-served’, has
chosen Bud’s Open Banking platform for
a partnership which it claims will help
improve access to credit approvals for
its customers as the cost-of-living crisis
intensifies. The partnership will harness
live Open Banking data, bringing it
together with credit report, eligibility and
TotallyMoney’s own product data.
Alastair Douglas, CEO of TotallyMoney,
says that Open Banking presents a
huge opportunity: “This will empower
our customers to step from ‘just about
managing’ to moving their finances
forward.”
Charity sparks concern over rising energy prices
ONE in four clients seeking debt advice
from StepChange Debt Charity are in
arrears on electricity and/or gas, and the
numbers are only likely to rise. Higher
interest rates, rising inflation, and
expected price rises are compounding
the problem, the charity says.
More than a quarter (28 percent) of
new clients were in arrears on electricity
in 2021 (compared to 17 percent in 2019,
pre-pandemic), and 23 percent behind on
gas bills (up from 13 percent in 2019). The
average value of arrears among those
with arrears has also increased.
Phil Andrew, CEO at StepChange,
says that energy prices are a source of
massive worry for people experiencing
or at risk of debt: “Despite the measures
to try to smooth out the imminent price
hikes, there is no escaping the likelihood
that electricity and gas arrears are likely
to worsen,” he says.
“For people in debt, the risk of
additional harm is huge. Energy costs
are priority bills, but even if people do
manage to pay them, they may well have
to fall behind on other commitments
to do so. It’s absolutely vital that
Government and firms do as much as
possible to cushion the blow, but also
that other creditors recognise the drag
this will have on household budgets and
flex their expectations and the help they
offer to customers accordingly.
“We welcome the Government’s
package of support, but it won’t plug the
gap in household finances for people
experiencing debt.”
In other related news, StepChange
and OVO Energy have created a new
partnership that they say will provide
a package of support to the charity
worth up to £2 million over the course of
2022 to support people facing financial
difficulty. To help provide the immediate
resource StepChange needs, OVO will
be funding additional frontline services
in 2022, worth £1m from April through
to the end of the year. It will also set up
a dedicated team to support vulnerable
customers, providing energy advice,
account health checks and sign-posting
customers to appropriate specialist third
parties.
Brave | Curious | Resilient / www.cicm.com / March 2022 / PAGE 6