Open Banking Payments Are Moving Into The Mainstream

Paying directly from account-to-account isn’t just faster and more affordable. It has the potential to drive a new era in payments. The past decade has seen a wave of new, digital payment solutions. Most of them however still rely on ancient infrastructure: plastic cards.

However, according to the Danish fintech Aiia, this is soon about to change. The company provides access to the direct account-to-account payments initiated directly in the bank’s API’s. Payments that are cheaper and faster but also have the opportunity to change the payment landscape in more dramatic ways.

“It’s not just a game-changer – it’s a huge game-changer,” Rune Mai, CEO and co-founder of Aiia says, and not just because his company is laying the tracks for the new infrastructure:

The past 20 years everything has been increasingly digitized. Money is one of the places that started this journey late, but right now payments are shifting from being something you have to execute manually to something that can be a service.
Rune Mai, CEO and co-founder of Aiia

And it looks like the change has already begun: So far Aiia has processed 1 million payments every month this year and expects this number to double many times over before the end of the year.

Payments as a tech-component

The popularity of payment cards has kept rising ever since its introduction decades ago. Several reports do however forecast a decline in traditional card use over the next five years. Payments will happen in real-time instead, and Visa and Mastercard are also betting on the change with new departments and acquisitions in this space.

According to Jozef Klaassen, who joined Aiia after a position in Visa three months ago, the shift into account-to-account payments has three main components.

The first is security: With account-to-account payments there are no intermediaries which means no card numbers and unnecessary data tracks. When the payment is initiated on behalf of the customers, it’s just a process between the user and the user’s bank.

Data is the second component: the new infrastructure allows messages around the payment itself – even before it’s executed. This way a retailer will be able to know if their customer has scheduled a payment for later, before they even ask, which has the potential to improve the efficiency for businesses.

And those two components enable the third: better user experience.

“It’s just simple and easy. Click an email and you pay. The person sending the invoice can change how they interact with the customer. The modularity of account-to-account changes payments into a technology component. You don’t have to pick up anything in the physical world. This transformation can happen – and it removes so much friction,” Jozef Klaassen, Chief Revenue Officer in Aiia, says.

Data and modularity

According to the two Aiia officers, the change isn’t just going to affect payment cards, but also a big chunk of the non-card environment – among other things, how we pay for subscriptions with better end-user control. While payments in the supermarket aren’t driving the change, they are both optimistic about the chances it will happen once the banks API’s have matured a bit more. Account-to-account payments have a bright future – and a lot is already happening in other places.

“Now, it’s starting to get into the early adopter phase in a lot of verticals: e-commerce and accounting are eager to try the technology, because they want to get in quickly and provide an amazing experience in new ways. More and more businesses are engaging with us,” Rune Mai says.

Just the fact that this new infrastructure is born European will change the pace for businesses scaling into Europe, Jozef Klaassen believes:

“Moving ahead, we will see more and more companies – fintechs, SME’s and banks – providing services in all of Europe like they do across the states in America. The new infrastructure will enable that and change how fast we will see European companies scale,” he says.