The UK Government took a bold step toward modernising the country ’ s payments landscape with its October 2024 National Payments Vision . This ambitious plan outlines a strategy for Open Banking to become a mainstream payment method , competing with cards for everyday transactions . It marks a decisive commitment to fostering innovation and competition in payments , paving the way for economic growth . Eline Blomme , Chief Strategy & Product Officer at Acquired . com , tells us more . hile the Vision signals progress , execution is

W complex . Regulators must address critical challenges in technology , regulation , and commercial alignment in order to realise goals of upgrading the UK ’ s payments infrastructure .

Competing with cards

Cards are integral to the UK ’ s payments ecosystem , with 29.1 billion payments made using credit or debit card in 2023 . They operate through a reliable , multi-phase process consisting of three parts : ( pre ) authorisation , capture , and settlement . This enables flexibility for merchants and consumers alike . For instance , when an online grocery order is placed , funds are pre-authorised at checkout , adjusted as items are added or removed from the basket , and finalised upon delivery .

On the other hand , Open Banking payments combine authorisation , capture and settlement into a single step , simplifying the process but limiting flexibility in the payment journey . For example , consider an Open Banking payment for taxis . To guarantee payment , customers would have to pay the estimated amount upfront . Moreover , if the journey differed from the estimated amount , that would require another transaction to make up the difference , as would any tips . This means that one ride could include three transactions taking place , making the unit economics of offering an Open Banking payment option less attractive than cards for merchants .

In the Netherlands , where Open Banking payments such as iDeal are dominant , companies with variable payment amount journeys only charge the total amount at the end of the customer journey . This www . intelligentfin . tech

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