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Wednesday, May 31, 2023

Open Banking is Massively Changing the Financial Industry

Open Banking has been changing the financial services industry, and startups have not been left behind. The service offers several advantages to startups, such as cost savings, increased security, and faster payment processing. In this article, we will explore how startups are using Open Banking services and what payment methods are preferable within the industry.

First of all, let’s determine what is Open Banking.
Open Banking is a financial services innovation that allows third-party financial service providers to access bank account data and perform financial transactions through Application Programming Interfaces (APIs). This innovation enables businesses to have more control over their finances and opens up new opportunities for innovation.

How are startups using Open Banking services?
Startups are using Open Banking services in several ways to improve their business operations. Here are a few examples:
1. Faster Payment Processing: to streamline payment processing, making it faster and more efficient. This advantage is particularly important for startups that rely on online transactions, as it can help them reduce payment delays and increase customer satisfaction.
2. Improved Security: to get a higher level of security than traditional payment methods. For example, startups can use Open Banking services to authenticate customers’ identities and reduce the risk of fraud.
3. Cost Savings: to enjoy a cost-efficient payment solution. For example, startups can use Open Banking services to avoid the high fees associated with traditional payment methods (card processing fees).

What payment methods are preferable within the industry?
When it comes to payment methods, startups have several options to choose from:
1. Direct Bank Transfers: one of the most popular payment methods within the industry. For example, Noda‘s platform allows users to make payments and transfers directly from their bank accounts, using direct bank transfers. This payment method is preferred by many users because it is instant and cost-effective. Moreover, Noda is a member of the Holland Fintech and Latvian Start.in association, supporting multiple European startups.
2. Payment Cards: the method is preferred because both debit and credit cards are widely accepted and convenient for customers.
3. Mobile Payments: the modern options, such as Apple Pay and Google Pay, are becoming increasingly popular within the startup sphere. Mobile payments are preferred because they are fast, secure, and convenient for customers.

In conclusion, startups are increasingly using Open Banking services to streamline their payment processing, improve security, and save costs. Direct bank transfers, payment cards, and mobile payments are some of the preferred payment methods within the industry. Moreover, better checkouts boost conversion by 35%. Startups that embrace Open Banking services and the latest payment methods will have a competitive edge in the marketplace.

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