Open Payments: Three Things You Need to Know

Service outages can be devastating for small businesses, as customers are unlikely to wait for systems to come back online. The connectivity provided by open payments allows transactions to be seamlessly rerouted, keeping businesses up and running.

Implementing open payments streamlines and accelerates transaction processing. It also provides merchants with a significant competitive edge by helping them lower costs and avoid transaction fees.

Open payments platforms provide the essential connectivity merchants need to leverage open banking. This integration creates new opportunities for businesses to boost revenue by offering enhanced financial services within their applications.

Register for Unlimited Access
Complete the form below to enjoy free, unlimited access to all our Trackers, Studies and MonitorEdge Reports.

Open payments have become a necessity for eCommerce businesses. With more payment options than ever, customers expect the businesses they patronize to accept their preferred methods. No matter how niche the option, payment platforms must be equipped to accommodate it or risk losing valuable customers.

While open payments connectivity sounds complicated on the surface, its benefits can be boiled down to three simple facts: First, open payments keep businesses safe and running smoothly. Second, they optimize transaction processing. Third, they allow merchants to take full advantage of open banking protocols.

Open Payments Safeguard Businesses From Outages
Open Payments Optimize Transaction Processing
Open Payments Empower Merchants to Make Full Use of Open Banking
Unlocking Merchant Potential Through Open Payments

Open Payments Safeguard Businesses From Outages

Downtime costs businesses hundreds of billions of dollars every year.

$400B

Annual cost of system downtime or service degradation to Global 2000 companies

One study found that downtime and service degradation cost Global 2000 companies $400 billion annually. This is to say nothing of the costs of downtime for smaller businesses. Compounding these financial impacts are the expenses companies incur repairing customer relationships. Global 2000 chief marketing officers report spending an average of $14 million annually on brand trust campaigns and another $13 million on public and investor relations.

While smaller businesses may not invest as heavily in such campaigns after downtime, they feel losses just as keenly if their customers abandon them. Merchant aggregators can help protect their merchants from these risks by reducing downtime through open payments protocols.

The recent CrowdStrike outage illustrates the far-reaching consequences of a single point of failure.

The July outage was dubbed “the worst IT outage in history,” affecting banks, airlines, hospitals, fast food chains, retailers — essentially any business using CrowdStrike software on the Microsoft Windows platform. While not directly related to payments, the outage serves as a stark warning to aggregators relying on a single payments gateway: A significant service disruption could cripple operations for every merchant partner. This highlights the need for open payments platforms. These platforms dynamically reroute transactions through alternative gateways, sidestepping this single point of failure and keeping merchants operating at full capacity.

Open Payments Optimize Transaction Processing

Implementing open payments streamlines and accelerates transaction processing. It also provides merchants with a significant competitive edge by helping them lower costs and avoid transaction fees.

Open payments help merchants avoid transaction fees.

Transaction fees and authorization rates differ not only across payment gateways but also by country of origin and the currency involved. This means that using a single gateway for all payments can lead to burdensome and unpredictable costs, depending on the customer mix at any given time. Open payments platforms can be configured using the transaction fee for each payment type based on a mix of variables to route them through the gateways with the lowest expected costs. This approach reduces merchants’ fees and leads to increased margins.

16%

of consumers say payment methods influence their purchase decisions.

Improving payments processing leads to increased sales.

A recent PYMNTS Intelligence study revealed that 16% of consumers said payment methods influenced where they made their most recent purchases. This underscores that retailers who fail to adapt to evolving consumer preferences risk losing a substantial share of their customers. Open payments platforms offer one of the most efficient solutions for ensuring that customers can access their preferred payment methods. This in turn can help merchants compete more effectively for limited customer attention and ultimately drive higher sales.

Open Payments Empower Merchants to Make Full Use of Open Banking

Open payments unlock the benefits of open banking for merchants.

46%

of U.S. adults are highly willing to adopt open banking payment methods.

Spreedly President Peter Dougherty noted in an August interview that open payments and open banking go hand in hand. Open payments can organically integrate open banking application programming interfaces (APIs), enabling merchants to leverage value-added features like saved payment capabilities or customer data tracking. This offers customers a more personalized and streamlined payments experience, promoting brand loyalty and driving higher revenue for the business.

Consumers express high demand for open banking products.

A PYMNTS Intelligence study found that nearly half (46%) of American adults are highly willing to adopt open banking payment methods for at least one transaction. Interest levels are highest for using open banking payments for monthly bills (40%), followed by groceries (35%) and subscriptions (33%). In addition, 26% of customers who already use open banking payments would consider switching businesses or service providers to access these payment options. These findings highlight the potential value of open banking for merchants, which merchant aggregators can tap into by enabling open payments platforms.

Unlocking Merchant Potential Through Open Payments

Merchant aggregators can greatly benefit from adopting open payments to streamline their operations and enhance the services they provide to merchants. By implementing an open payments platform, aggregators can offer their merchant customers a unified interface for managing multiple payment gateways, methods and currencies. This centralized approach simplifies payment integrations, allowing merchants to add new payment options easily or expand into new markets without increasing operational complexity. Consequently, merchant aggregators can attract and retain more merchants by offering a flexible, scalable payment infrastructure that adapts to diverse business needs.

Moreover, the connectivity enabled by open payments allows merchant aggregators to optimize transaction processing and introduce advanced payment features like open banking payments. Merchants can intelligently route transactions through different gateways based on factors such as transaction size or customer location, potentially increasing acceptance rates and reducing costs. By offering these same services as a value-add for their merchant customers, aggregators can enhance the payment experience for their merchants’ customers while creating new revenue streams through premium features like advanced analytics or specialized routing rules.

About

Spreedly’s open payments platform enables access to the global consumer, processing more than $50B GMV annually in more than 100 countries. Built to overcome the challenges of commerce in a cashless world, we empower our merchants through an open, secure and inclusive payment ecosystem, unlocking choice among PSPs, fraud tools and other innovative payment services.

PYMNTS Intelligence is a leading global data and analytics platform that uses proprietary data and methods to provide actionable insights on what’s now and what’s next in payments, commerce and the digital economy. Its team of data scientists include leading economists, econometricians, survey experts, financial analysts and marketing scientists with deep experience in the application of data to the issues that define the future of the digital transformation of the global economy. This multilingual team has conducted original data collection and analysis in more than three dozen global markets for some of the world’s leading publicly traded and privately held firms.

The PYMNTS Intelligence team that produced this Tracker:
Managing Director: Aitor Ortiz
Senior Writer: Andrew Rathkopf
Senior Content Editor: Alexandra Redmond
Content Editor: Joe Ehrbar

We are interested in your feedback on this report. If you have questions or comments, or if you would like to subscribe to this report, please email us at feedback@pymnts.com.

Disclaimer

The Payments Orchestration Tracker^® Series may be updated periodically. While reasonable efforts are made to keep the content accurate and up to date, PYMNTS MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, REGARDING THE CORRECTNESS, ACCURACY, COMPLETENESS, ADEQUACY, OR RELIABILITY OF OR THE USE OF OR RESULTS THAT MAY BE GENERATED FROM THE USE OF THE INFORMATION OR THAT THE CONTENT WILL SATISFY YOUR REQUIREMENTS OR EXPECTATIONS. THE CONTENT IS PROVIDED “AS IS” AND ON AN “AS AVAILABLE” BASIS. YOU EXPRESSLY AGREE THAT YOUR USE OF THE CONTENT IS AT YOUR SOLE RISK. PYMNTS SHALL HAVE NO LIABILITY FOR ANY INTERRUPTIONS IN THE CONTENT THAT IS PROVIDED AND DISCLAIMS ALL WARRANTIES WITH REGARD TO THE CONTENT, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, AND NONINFRINGEMENT AND TITLE. SOME JURISDICTIONS DO NOT ALLOW THE EXCLUSION OF CERTAIN WARRANTIES, AND, IN SUCH CASES, THE STATED EX CLUSIONS DO NOT APPLY. PYMNTS RESERVES THE RIGHT AND SHOULD NOT BE LIABLE SHOULD IT EXERCISE ITS RIGHT TO MODIFY, INTERRUPT, OR DISCONTINUE THE AVAILABILITY OF THE CONTENT OR ANY COMPONENT OF IT WITH OR WITHOUT NOTICE.
PYMNTS SHALL NOT BE LIABLE FOR ANY DAMAGES WHATSOEVER, AND, IN PARTICULAR, SHALL NOT BE LIABLE FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL, OR INCIDENTAL DAMAGES, OR DAMAGES FOR LOST PROFITS, LOSS OF REVENUE, OR LOSS OF USE, ARISING OUT OF OR RELATED TO THE CONTENT, WHETHER SUCH DAMAGES ARISE IN CONTRACT, NEGLIGENCE, TORT, UNDER STATUTE, IN EQUITY, AT LAW, OR OTHERWISE, EVEN IF PYMNTS HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
SOME JURISDICTIONS DO NOT ALLOW FOR THE LIMITATION OR EXCLUSION OF LIABILITY FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES, AND IN SUCH CASES SOME OF THE ABOVE LIMITATIONS DO NOT APPLY. THE ABOVE DISCLAIMERS AND LIMITATIONS ARE PROVIDED BY PYMNTS AND ITS PARENTS, AFFILIATED AND RELATED COMPANIES, CONTRACTORS, AND SPONSORS, AND EACH OF ITS RESPECTIVE DIRECTORS, OFFICERS, MEMBERS, EMPLOYEES, AGENTS, CONTENT COMPONENT PROVIDERS, LICENSORS, AND ADVISERS.
Components of the content original to and the compilation produced by PYMNTS is the property of PYMNTS and cannot be reproduced without its prior written permission.
The Payments Orchestration Tracker^® Series is a registered trademark of What’s Next Media & Analytics, LLC (“PYMNTS”).

Payments Orchestration Tracker^® Series Report

Three Things You Need to Know About Open Payments