Open banking set to be dominant form of payment in car retailing by 2030

By the end of the decade, open banking is set to become the dominant form of payment in car retailing. Low transaction fees and reduced exposure to fraudulent card transactions will benefit dealers greatly.

What is open banking?

Rather than relying on debit or credit cards issued by a third party, open banking allows customers to pay directly from their personal account into a dealer’s account.

According to the Open Banking Implementation Entity, a standards body set up by the UK’s largest banks, the UK has seen exponential growth of open banking in recent times with 4.5 million regular users across all retail sectors and 1 million new users added every six months.

James Jackson, CEO and co-founder of Bumper said, “Customer transactions are already being transformed by open banking across other retail sectors. Because of the high invoice values associated with automotive, we anticipate it becoming the dominant form of payment in dealerships by the end of the decade.”

“Car buyers using open banking can make their payments online in a matter of seconds using just their bank account credentials. Also, because these payments require bank authentication within a customer’s banking app, it makes fraud significantly harder, giving a greater layer of protection to dealers.

“While dealers offering open banking can expect to see their transaction costs halve by the removal of hefty fees associated with card payments. Other benefits include more secure digital payments, minimising dealers’ exposure to fraud, and full GDPR compliance.”

“Open banking offers a solution that better meets the changing needs of customers looking for more convenient and smarter digital alternatives to cards.”

“The addition of open banking further expands our suite of digital payment options, sitting alongside Pay Now and Pay Later, enabling dealers to offer customers the payment option that works best for their personal finances,” said Jackson.

We expect dealers will offer the option of open banking for customers making large deposits, after-sales bills, GAP insurance and extended warranties.

Starting this month, Bumper offers dealers an open banking facility, fully integrated with REALtime communications.

To find out more, contact our sales team via sales@bumper.co.uk