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How open banking is solving real small business problems

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Last editedOct 20222 min read

Running a small business isn’t easy. By the nature of their size, small businesses often require their staff to wear many different hats, which brings with it a variety of challenges.

But of the 12 most important challenges SMEs in the UK face, one core business function impacts over 65% of them: payments.

Improving your business’s payments function with the right technology ultimately contributes to solving eight out of those top 12 challenges.

But existing payment solutions are fraught with problems. Manual bank transfers offer a clunky payment experience for your customers, and burden you with late payments. Cards come with expensive fees and high failure rates. And Direct Debit payments aren’t authorised instantly, meaning delays before you can deliver goods or services.

How open banking provides your business a better way of getting paid

Open banking payment solutions provide you a new and better way of collecting payment from your customers. Where you don’t have to rely on your customer initiating the payment process, or risk them getting details wrong, or face expensive card payment fees.

We’ve built one ourselves - Instant Bank Pay, which allows you to collect payments with instant verification of success, for situations including:

  • Collecting a first payment and setting up a Direct Debit mandate for future payments, simultaneously

  • Collecting ad hoc payments for additional goods or services on top of your regular, recurring billing

  • Sending an invoice with a ‘Pay now’ link

Open banking payments + your existing business software

The greatest value of open banking payments doesn’t come from the payments platform alone. By connecting up open banking payments with your existing business software, such as cloud accounting software, you bring even further time and cost savings to your business.

GoCardless partners with 200+ business softwares. One key partner of ours - Xero - believes in the benefits of open banking for small businesses just as much as us. 

Xero and GoCardless have partnered together since 2017, enabling businesses to get paid up to twice as fast, compared to businesses who don’t use online payments. In 2020 we deepened this partnership, culminating in the recent launch of an all-new GoCardless experience inside Xero, an iteration of the previous version of our award-winning app for recurring payment collection.

We’re now partnering together again to go one step further. Xero will harness the power of open banking by bringing Instant Bank Pay - GoCardless’s new one-off payment collection method, powered by open banking - to its users. 

“We believe cash flow management underpins business success. The ability to quickly and easily receive payments is crucial for small businesses in today’s world, and we’re excited to be partnering again with GoCardless to bring an innovative open banking payment solution to our customers.”

Craig Walker, EGM Payments, Billing and Automation @ Xero

The future of open banking payments

We are excited about the future of open banking payments. As the technology continues to mature, two things are likely to happen:

  • The products get even better - Open banking payment products will become increasingly advantageous for businesses to offer, compared to legacy payment methods like manual bank transfers or credit cards.

  • Paying by open banking becomes widely available - Open banking payments are limited to the UK for now but more countries are in the process of enabling similar technology, with cross-border open banking payments likely to become achievable in the not-too-distant future.

Are you a Xero user?

Instant Bank Pay - the new way to take one-off payments, powered by open banking - is coming soon. Want to be notified when you can use it? Request early access below.

Request early accessMore about GoCardless+Xero

Interested in automating the way you get paid? GoCardless can help
Interested in automating the way you get paid? GoCardless can help

Interested in automating the way you get paid? GoCardless can help

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