One in five Brits are now making regular payments via Open Banking. Younger generations are increasingly adopting this form of payment with 44% of students now using Open Banking to make payments.
This is according to research carried out by Moneyhub. Open Banking payments allow users to make a payment directly through their phone’s banking app or online banking account directly to another account. This can be a quicker and more cost-effective alternative to other payment options such as card payments, standing orders or direct debits.
While cards remain the dominant payment method on the high street and online, businesses are exploring alternative options for their customers, often triggered by high acquiring costs and settlement delays which are impacting cashflow.
Direct debit still widely used
70% of Brits use the direct debit method for their regular bills. The monopoly that this method has in the regular bill payment sector will be challenged as Open Banking’s variable recurring payments become an option.
Open Banking payments are increasing in prevalence and relevance. Moneyhub’s research comes following figures showing that Open Banking payments hit a milestone earlier this year, hitting 11.78m transactions in September, with the number of active payment users surging by 68.2% in July 2023 compared to the same month the previous year.
This alternative payment method is increasingly being used by the younger generations with 29% of 16-24 year olds and 26% of 25-34 year olds making payments using Open Banking. In comparison, just 13% of those aged over 55 years old use Open Banking payments.
Mark Munson, MD of Moneyhub’s Payment Division said: “The world of payments is constantly evolving, and the Smart Payment revolution that Open Banking enables is set to shake up how we manage our regular bill payments. Fifty years ago we would have seen payment by cheques or cash as the predominant tool to pay for bills, then direct debits and standing orders grew into popularity.