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Open Banking could save SME online retailers over £19,000 a month

Open Banking could save SME online retailers over £19,000 a month in transaction fee savings, according to new report

  • SME retailers currently spend £22k on average a month on transaction fees
  • Open Banking technology could reduce these fees by 90%, according to new research from Yolt
  • Other innovations for UK retailers include instant refunds and fraud reduction

The average SME online retailer could save an estimated £19,000 by reducing transaction fees associated with popular payment providers such as AMEX, Mastercard and Visa could through the adoption of Open Banking technology, according to research from Yolt, one of Europe’s leading Open Banking providers.

At present, small online retailers in the UK process approximately 217 sales a day – increasing by 24% if that retailer also happens to have both an online and in-person presence. On average retailers pay a transaction fee of approximately 1.8% across all different payment types, with the highest charges found in Buy Now, Pay Later payment methods (3.2%) and debit cards (3%).

Open Banking

Even taking into account just the most popular payment providers (AMEX, Mastercard and Visa) the average small business will spend over £22,000 a month on transaction fees, costing the entire industry an estimated £66 billion every year.

However, the adoption of Open Banking technology could significantly reduce these costs, as it does not utilise commission-based transaction fees, providing lower and more predictable costs to the retailer. This could save the average SME online retailer approximately £19,000 a month.

“The retail industry has been incredibly hard-hit by the economic challenges of the past few years. Small businesses in this sector in particular are likely still finding their feet and recouping losses. Open Banking technology can provide solutions which alleviate common financial stressors on these businesses and allow them instead to focus their spending on strategies to improve growth”, says Nicolas Weng Kan, CEO of Yolt.

Open Banking could also assist SME retailers be alleviating other pressures on their business. On average SME retailers spend 18 hours a week processing refunds, for instance. At present, it takes nearly three days to settle these with a payment provider. However, Open Banking technology can make these refunds instant.

A third of SME online retail businesses (34%) also experienced fraud in the last year including supply chain fraud (64%), authorised push payment fraud (42%), account takeovers (40%) and cyber-attacks (30%)– losing an average of £4,257 a year. With the introduction of Open Banking technology, many of these incidents of fraud could be avoided providing further savings to recovering SMEs.