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    Open banking delivers payments so cheap, merchants can afford to give discounts

    A new fintech start up called Volume is pledging that it can pass on the savings made by using open banking to allow merchants and retailers to give discounts to consumers at the point that they purchase – if they use the Volume digital payment app.

    In a move being dubbed “Pay now, spend less”, Volume says that thanks to open banking rules it can not only offer the immediacy of account to account direct payments between consumers and merchants, but can also allow sellers to offer shoppers tailored discount levels based on savings from bypassing the fees levied by conventional payment intermediaries, such as debit and credit cards, e-wallets and Buy Now Pay Later.

    Learn more about open banking and what it means for telemedia and payments at World Telemedia Marbella

    19-21 October.

    Book your place here

    These charge fees ranging from about 2% up to 8% on every sale to every business. That means, for every £100 spent on the internet, up to £5 is withheld by payment companies, whether the buyer is booking a taxi, ordering food, or buying a new t-shirt. Most businesses admit to passing these costs on to consumers. Even with these high fees, the money due to the seller can still take up to seven days to arrive in the merchant’s bank account.

    Payment charges are also continuing to rise. For example, in October 2021 both Visa and Mastercard increased cross-border interchange fees on purchases in Europe. The impact of high transaction fees on merchants — totalling $100 billion annually, according to McKinsey — became highly visible in a 2021 public dispute, now resolved, when Amazon threatened to stop the use of UK-issued Visa credit cards. By enabling direct payments between shoppers’ and merchants’ bank accounts , Open Banking reduces these fees, potentially close to zero.

    By eliminating payment intermediaries, the startup calculates that shoppers stand to save £3.2 billion annually in the UK alone,1 with merchants gaining instant settlement and substantial reductions in fraud.

    Simone Martinelli, co-founder and CEO of Volume, says: “Volume wants to create a financially sustainable Internet where money moves free of costs, from consumers to businesses and vice versa. To do that, both merchants and consumers alike need to be incentivised. Pay Now Spend Less is the next obvious evolution for debit cards. We are revolutionising payments in the same way that Klarna did for credit cards 10 years ago.”

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