Open Banking payment initiation up 800% during lockdown

Payments made through Open Banking surged by 832 per cent during the Coronavirus lockdown.

Data analysis by TrueLayer, a provider of Application Programming Interfaces (APIs), revealed that the use of payment initiation soared between March and July in the UK, as consumers switched to digital payments for goods and services.

The majority of growth (88 per cent) was from people with bank accounts held at traditional financial institutions, with account holders at digital challenger banks accounting for 12 per cent of growth.

This indicates an increasing broader acceptance of APIs beyond the more technologically progressive users at neo banks, according to TrueLayer’s analysis.

Payment initiation is a new form of online payment enabled by the EU's second Payment Services Directive (PSD2).

It allows payments to be made directly via a customer’s online banking, meaning transaction fees are lower than nearly all other means of online payment; processing times are cut from days to hours; and the process is highly secure as it uses the bank’s security provisions.

Prior to the lockdown in the UK, TrueLayer, which accounts for around half of the payments initiation market in the UK, had previously recorded a steady 43 per cent month-on-month increase in payment initiation adoption.

This shot up 460 per cent in March, as many people began working from home or were furloughed.

TrueLayer’s Payment API has been adopted by companies including Revolut, ANNA Money, Nutmeg, and Stake. TrueLayer has also been approved by the UK’s Cabinet Office to provide its Payment API to government departments enabling payment initiation to be used within the public sector.

Shefali Roy, chief operating officer at TrueLayer, said: "The surge during lockdown has been remarkable and has not been confined to any one group of people - it is very much a broad-based trend.

"However, perhaps the most interesting result our analyses revealed is that growth has not dropped off - meaning that those who began using payment initiation during lockdown are continuing to do so after restrictions were eased.”

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