A recent study by Yapily, an Open Banking provider, and YouGov has highlighted significant dissatisfaction among UK merchants and consumers regarding existing payment infrastructure. Nearly 80% of surveyed businesses view high transaction fees as a major concern when evaluating new payment options.

Key Issues Identified

About two-thirds of the merchants cited fraud risks, and more than half mentioned data breaches as top concerns. Many also criticized the chargeback process, deeming it inefficient and biased towards consumers.

Merchant Preferences

Nearly all merchants (98%) prioritize low transaction fees. Additionally, they seek secure systems and are open to adopting Open Banking-based solutions as a lower-cost alternative with robust fraud protection.

Consumer Priorities

For consumer preferences, convenience and safety top the list. For purchases under GBP 20 from familiar brands, almost half (49%) of consumers prioritize ease of use over security. However, for larger transactions, especially with unfamiliar merchants, 51% of respondents consider security as their primary concern.

Despite the desire for reduced fraud risks, which would likely make new payment methods more appealing to 58% of consumers, traditional card payments remain popular due to familiarity and trust. Moreover, open banking is associated with lower fraud rates but may still need to address consumer concerns effectively.

Criticism of Chargeback Model

Merchants expressed notable dissatisfaction with the chargeback process. About 40% found it too favorable towards consumers and called for its streamlining or removal entirely.

Industry Recommendations

In response to these findings, Yapily has proposed several recommendations aimed at enhancing Open Banking adoption. Suggestions include creating a unified value proposition across the ecosystem, developing a consumer protection model specifically tailored for Open Banking, and introducing a trustmark to identify open banking payment options.

Yapily representatives emphasized that while Open Banking is gaining traction, further growth depends on building greater trust and improving usability. They stressed the need for consumer protections that provide adequate safeguards without replicating outdated mechanisms like chargebacks.