Dutch payments platform Adyen has launched a new, open banking-powered, alternative to card transactions.
Taking advantage of the EU's PSD2 requirement for banks to create APIs that let third parties initiate payments on behalf of consumers, Adyen has plugged in to the UK's biggest account providers. Other European countries are expected to follow.
Open banking payments are authenticated directly between consumers and their banks, meaning, unlike with direct debits, merchants can avoid chargebacks generated due to fraud or an inability to capture funds.
Customers select the payment type during the checkout process, at which point they are redirected to their bank’s online environment to securely confirm the transaction. Adyen handles the payment flow between the bank and the merchant.
The firm says that its new offering can slash processing costs for higher transaction values and, because open banking offers real-time credit transfers, the payments are guaranteed, enabling merchants to ship products immediately.
For launch, Adyen has signed up Dutch airline KLM as the first big brand to roll out the service.
Myles Dawson, UK MD, Adyen, says: "Bank transfers between consumers and merchants are already extremely popular in mainland Europe because they offer greater fraud protection without adding friction to the payment process.
"We are excited to be the first payments provider to offer a fully-compliant, direct payment solution in the UK and it has been great to work with the Open Banking Implementation Entity to bring these benefits to consumers and merchants."