In online retail, account-to-account payment methods powered by open banking have been languishing in single-digit adoption rate territory for years. This has held the industry back. Moreover, it has prevented retailers from realising any of the significant benefits of the technology. Examples include reduction in fees, instant access to cashflow and no chargeback risk.

Start-up Underpay is determined to change all of that. It has taken a consumer-first approach to the technology. And Underpay says that it has built a product and business model tailored towards one simple question. That is: why should a consumer decide to pay through open banking instead of using a card?

Dima Tarasenko, co-founder and co-CEO, said: “Consumers just want the cheapest, fastest and safest way to pay. Merchants want to sell easily and to sell more. The technology is only important in the context of serving those goals.”

The Underpay value proposition

Initially, Underpay will partner with growth-oriented D2C brands whose products target young consumers. Tarasenko says this segment of the market are increasingly rejecting credit cards. Instead, they are turning to BNPL for their credit needs, or simply paying by debit card. The company is targeting the debit portion of this spend with a simple “no-strings-attached rewards on debit purchases” value proposition. Specifically: pay with any of 20+ major UK banks via Underpay, earn 1% back in Underpay points.

Founded in early 2023, Underpay has already raised £200,000 in angel investment. In addition, the company has generated significant consumer interest, signing up thousands of people to their waitlist. The company, a Shopify Payment Partner with a direct integration, launched their payment method with several merchant partners earlier in November.

Now, it plans to aggressively expand its merchant network and challenge the payments status quo. Tarasenko added: “The consumer credit system is fundamentally broken. Lots of people get a credit card just for the rewards. There are millions of people who don’t have access to credit cards and thus earn nothing at all. We think we can provide a genuine credit-free alternative to all of those consumers. At the same time, we help our merchant partners do what’s most important to them. That is, find new audiences for their products and grow their business.”

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