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Are bank transfer payments the new kids on the block for UK consumers

By James Booth, VP Head of Partnerships, EMEA at PPRO

Between 2017 and 2019, the number of UK online transactions paid for using a bank transfer increased by 36% [2]. In fact, British consumers now use bank transfers as a payment method for over 8% of all British online transactions [2]. Yet, despite being one of the most innovative and fast-moving fintech sectors in Europe with investments in the British fintech sector hitting $4.9 billion in 2019, there isn’t much buzz in the UK about the growth of bank transfers.

However, with the unprecedented COVID-19 isolation and travel restrictions meaning that the over-70s and those with health conditions are unable to leave their homes, bank transfers could become an increasingly popular option in the coming weeks.

Due to a lack of online food delivery slots, many individuals are now relying on the kindness of family, friends and other members of the community to do their food shopping. However, the restrictions also mean those at risk can’t get cash out and most feel uncomfortable handing over their cards to the volunteers from a security perspective. As a result, such people are being forced to use digital payment methods, such as bank transfers, to purchase goods that may have otherwise never been likely to use the method [3].

All of which makes it odd that almost no one is talking about the quiet, but unmistakable rise of bank transfer payment methods in the UK.

Why have bank transfers become so popular?

James Booth
James Booth

To anyone who knows the UK payments market, this isn’t surprising. The best bank transfer payment methods offer transparency; allowing the consumer to see their balance in real-time, before they press the “buy” button. Payment is quick and easy — often just one or two taps on a mobile device — and there’s no need to enter card numbers, CVV codes, or any other payment information. And because it’s been vetted by their bank, consumers can have confidence in bank transfers as a payment method.

All these qualities answer the genuine needs of both consumers and online merchants. Two separate pieces of research over the last year have found that 75% of UK consumers are worried about the security of personal data they share with companies [4] and 68% aren’t ready to switch to digital payments specifically because of concerns about the security of new payment methods [5].

Rising security concerns for UK consumers

Finding a solution to this is necessary if UK e-commerce, particularly mobile commerce, is going to fulfil its potential for growth. It would also be good for consumers who want to shop from their mobiles: 76% say m-commerce is convenient and saves time (but that a poor checkout-experience undercuts this) [6].

Using secure bank transfer apps is one way of allowing these consumers to have both convenience and confidence, which has encouraged more and more consumers to use Pay by Bank app in the UK.

How do bank transfers work for online payments?

Historically, consumers have been advised against bank account transfers to pay for goods and service, due to a lack of recourse should the transaction go wrong. This is where card payments, particularly credit card payments have been promoted as a more secure option, particularly for higher cost purchases.

Through Pay by Bank apps consumers can expect the same level of assurance and enhanced convenience through mobile banking. At checkout, the consumer selects Pay by Bank app as their preferred payment method. They log into their bank app, see the payment request, select an account to pay from, and then confirm payment.

Each Pay by Bank app payment is made directly from the bank account and uses secure digital tokens, ensuring consumer’s payment information remains secure. “Pay by Bank app makes buying online efficient, easy and manageable within seconds. It reassures customers by allowing them to check they have the funds they need to make the payment and removes the need to share payment details. Ultimately, it offers peace of mind that the transaction is safely handled in the secure environment of their trusted mobile banking app,” says Suren Nawalkar, Senior Vice President of Pay by Bank app.

With data breaches and software flaws regularly making the news, consumers have become more aware of data privacy and security than ever before. When we combine these concerns with the ever-increasing demand for convenience when it comes time to pay, we get the ideal conditions for bank transfer apps to flourish.

That’s why the adoption of bank transfer apps, including Pay By Bank app, is going to be one of the next big growth stories in the payment sector for 2020 and beyond.