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GoCardless launches two open banking features in Germany, offering instant one-off payments and fraud prevention

Linda Yang
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Last editedAug 20223 min read

  • GoCardless introduces its ‘Instant Bank Pay’ feature, enabling German merchants to collect payments directly from a customer’s bank account with instant authorization, a move that builds on established consumer preferences for bank payment and offers an alternative to cards

  • The fintech is also rolling out Verified Mandates, an anti-fraud feature that combines open banking with bank debit to stop payment fraud before it happens

  • The launch comes as the fintech continues to execute on its open banking plans following its Series G funding round, fuelling expansion in key markets including Europe -- which is forecast to have 64m active users of open banking by 2024

SAN FRANCISCO and MUNICH, 21 June, 2022 -- GoCardless, a leading fintech in direct bank payment solutions, has today launched two open banking features in Germany through the introduction of Instant Bank Pay and Verified Mandates

Instant Bank Pay

Instant Bank Pay allows merchants to take instant, one-off account-to-account payments from new and existing customers while still reaping the benefits of bank debit for their recurring payments. The open banking feature represents a new breed of instant payments in Germany and addresses an issue that is particularly acute for recurring revenue businesses: according to research from GoCardless, 88% of merchants in Germany with this model have a need for collecting additional one-off payments. Examples include making a first payment when setting up a bank debit (e.g. signing up for a physical box subscription), purchasing additional goods or services, or topping up an account outside of a customer’s regular payment schedule. 

Although bank debit is preferred in Germany, with consumers citing it as their top way to pay for subscriptions, household bills and instalments, it is not suitable for one-off payments because it doesn’t provide instant visibility of payment authorization. This has forced many merchants to turn to card payments, often with high fees attached, or time-consuming manual bank transfers. 

By using Instant Bank Pay, merchants benefit from:

  • Instant payment confirmation, with high likelihood of payment success

  • A more secure payment method, reducing the risk of fraud by asking payers to authorize bank account information while creating a mandate 

  • A global bank pay network which intelligently combines bank debit and Instant Bank Pay, giving businesses the flexibility to collect both recurring and one-off payments in the way that best suits their needs 

  • Lower cost through reduced admin and reconciliation time, plus savings from avoiding high card fees  

Merchants can build the Instant Bank Pay feature straight into their checkout flow or simply send a payment request with a link to pay. Similar to a mobile wallet payment, payers are seamlessly connected to their bank, and can authorize a payment directly from their bank account in just a few clicks.

Verified Mandates

Verified Mandates uses open banking to automatically and instantly verify customer information as part of the flow of setting up a new bank debit mandate, thereby reducing payment fraud. 

This risk is common, particularly amongst B2C companies processing a high number of transactions. Over a third (35%) of European businesses rank payment fraud among the top threats facing their business today, and in Germany, over half (53%) of merchants report losing up to 5% of annual revenue due to fraud.

At the moment, businesses are forced to accept fraud risk -- and the potential for losses -- or purchase additional fraud solutions. With Verified Mandates, GoCardless offers merchants a simple way to stop fraud before it happens, without compromising the customer journey.  

By using Verified Mandates, merchants benefit from:

  • An integrated solution: a verification process built straight into the payment flow, reducing the need to purchase additional fraud prevention solutions and giving businesses the ability to manage everything in one place

  • A seamless checkout: customers are automatically connected to their online banking platform and fully verified with just a few clicks -- helping merchants keep conversion rates on track while reducing exposure to fraud

  • Revenue protection and reduced admin: verifying customers immediately will save time and money, especially as it takes more than half (51%) of German merchants between 2-5 working days to identify fraudulent payments

Alexandra Chiaramonti, General Manager of Continental Europe at GoCardless, said: “Open banking is growing rapidly, with 64m active users projected in Europe by 2024. With the launch of Instant Bank Pay and Verified Mandates, we’re enabling German merchants to get ahead of the curve. We’re excited to offer this new technology to help them tackle a range of challenges, from high card fees to payment fraud, while at the same time offering consumers a preferred, more secure, and seamless way to pay.”

The introduction of Instant Bank Pay and Verified Mandates in Germany is the latest development in GoCardless’ open banking roadmap. Earlier this year, the fintech launched Verified Mandates in the UK and announced a Variable Recurring Payment (VRP) agreement and pilot with NatWest Group, in addition to its first VRP customer, Nude. GoCardless plans to release its VRP proposition in line with the industry roll-out in the UK next month, and Instant Bank Pay and Verified Mandates across Europe later this year.

Notes to Editors.

Unless otherwise noted, the research cited in this release was conducted by GoCardless and covers 300 businesses across Germany. The survey was carried out online in February 2021.

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