Open Banking Transfers: What Are the Benefits for Your Payments?

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39 billion euros: that’s the amount represented by bank transfers in France in 2022, according to the report from the Payment Methods Security Observatory!

This figure is significant for this payment method, which is THE most used in terms of amount.

Thus, if today, you are interested in the different payment methods available on the market to be able to offer them in your payment journey, you cannot ignore the importance of understanding bank transfers.

And if you are keen on innovations, then, not understanding Open Banking and how transfers with Open Banking work would be a big mistake, because they can bring you many benefits if you choose a solution that meets your main financial challenges!

Do you want to know more about Open Banking transfers?

Then, you are in the right place, because in this article, we will see step by step what the characteristics of a transfer are, and why a transfer coupled with Open Banking can be a powerful tool for your business.

Finally, we will highlight a turnkey solution that you can use to manage your account-to-account transfers as a business.

The Transfer: Genesis and Key Data

At the origin of the transfer as you know it, there is a directive on payment services, also called PSD1.

Since PSD1, you can make transfers across the SEPA zone (Single European Payment Area) countries using recognized and secure payment standards.

Regarding payment standards, when talking about SEPA transfer, it is important to know that it includes the following data for the transfer processing:

  • the account to be credited, called IBAN (International Bank Account Number): it consists of a series of characters, and to give you an idea, a French bank account is made up of 25 characters,
  • the code of the bank to be credited, called BIC (Bank Identifier Code), which consists of a series of 8 or 11 characters, a mix of letters and numbers,
  • the amount of the transfer in euros,
  • the execution date of the transfer,
  • the settlement motive, reason, or subject, depending on the banks, which serves as a reference for the sender of the transfer and/or the recipient.

You will understand later why we mention all these data, as they can be tedious for your clients to enter.

In addition to this, it is important to keep in mind that there are several types of SEPA transfers.

What Are the Different Types of Account-to-Account Transfers?

There are three types of SEPA transfers:

  • the so-called classic transfer, also called SCT (SEPA Credit Transfer): this is the first type of transfer that was initially created and provides a payment period of 2 business days;
  • the standing order: it derives from the classic transfer and is a classic transfer with several occurrences over time (every month, for example);
  • the so-called instant transfer, or SCT Inst (SEPA Credit Transfer Instant): a more recent payment method, it provides a fund transfer within 10 seconds post-issuance.

Note: For banks that accept it, the big advantage of instant transfer is the possibility of being set up 7 days a week and 24 hours a day, the downside being that not all establishments offer it today and that it often has a cost (around 1 € for traditional banks) or a free cap (around 500 € for online banks).

The major difference, if you understood well, is the processing time, namely, immediate or deferred, and in your case, you probably want to prioritize instant transfers to avoid processing delays.

We have just seen what the different types of account-to-account transfers are, let’s now see how this payment method integrates into the innovations developing in the payment sector, one of the most important being Open Banking.

The Transfer: Why Couple It with Open Banking?

We talked about PSD1 in the first part of this article. Well, you should know that this regulation has a little sister: PSD2 (and even another one being implemented, PSD3).

Concretely, PSD2 provides various updates to PSD1, but what is important to retain is the opening of banking services and the data it highlights.

In other words, thanks to PSD2, traditional banks were forced to share their clients’ data with regulated actors called PSPs, or Payment Service Providers (of course, in a secure and controlled manner), hence the name “Open Banking”.

And, in all transparency, it is also thanks to PSD2 that you have the possibility to benefit from payment solutions using Open Banking such as those we offer at SlimPay!

But let’s stay focused and explain a bit about the benefits of coupling transfers with the use of Open Banking.

Open Banking brings a significant added value in terms of data exploitation on payment initiation, most often through dedicated programming interfaces called APIs, which allow extending existing banking services.

We mentioned at the beginning of this article that the data required for a SEPA transfer are tedious for your consumers to enter with each issuance of a transfer…

Did you know that thanks to Open Banking, there are now transfer payments that do not require entering all this data?

No, you are not dreaming, and we will even present one to you at the end of this article! 😀

But before that, it’s important to understand the advantages you can have by using the transfer as a payment method and Open Banking as technology.

What Benefits Does Open Banking Transfer Offer?

Using Open Banking transfer allows you to offer transfer solutions that meet your challenges in terms of:

  • Fraud and payment incidents: market solutions that use Open Banking enable the verification of the existence of the IBAN, which avoids numerous errors and potential fraud;
  • Automation: automating your payment process will allow you to avoid the number of errors related to manual entry, and this is all the more simple with Open Banking since data can be shared easily;
  • Control over the execution date to anticipate your cash flow: thanks to instant payment and Open Banking, you have the possibility to see funds transferred in 10 seconds, which allows you to monitor your financial flows in real time.

Are you looking for a solution to be able to offer your clients payments with Open Banking and take advantage of its benefits?

Well, we have one to propose to you. 🙂

What Solution for Your Open Banking Transfers?

At SlimPay, we have developed a solution combining transfer and Open Banking: SlimCollect.

By integrating the SlimCollect tool into your payment journeys, the payment process will be simplified for your consumers, and you will be able to better manage all payment flows on a single interface.

On the consumer side, it just takes a strong authentication on their banking app followed by payment validation, and the transfer will be issued from their bank account to the company’s.

For you, no more need to have multiple payment intermediaries, it will be an account-to-account payment; the sum to be transferred will be moved from your client’s account to your company’s bank account.

Concretely, What Benefits for You to Use SlimCollect?

  • Increased security: Open Banking means security! The transfer is initiated directly from your clients’ banking app.
  • Reduced costs: unlike credit cards for which you will pay fees for the use of card networks (Mastercard, Visa…), fees are reduced for Open Banking transfers with SlimCollect.
  • Funds transferred quickly: by using the power of instant payments combined with that of Open Banking, no need to wait days (as is the case with other payment methods) to see your company’s accounts credited.
  • A single platform to monitor your financial flows from start to finish: instead of having multiple entry points to follow the initiation of payments, their reception, or worse, associated refunds, thanks to SlimCollect, which uses Open Banking, you can have access to all the data in one place.
  • A reduction in payment failures: no more need to manage the expiration of payment methods leading to payment rejection, and a potential discrepancy in your cash flows. All this is over thanks to the SlimCollect solution that allows you to manage failures and rejections of payment transparently.

Your consumers need more innovative payment solutions to keep up with the market, more digital to stay at the heart of current uses, and more secure to be reassured in their purchasing act… So why not opt for SlimCollect and Open Banking? 🙂