Williams, the UK’s largest independent trade only plumbing and heating merchant, has experienced a 666% rise in card interchange fees since 2018.
Given its customers mostly pay with business debit or credit cards where interchange is at its highest, Williams is seeking to save costs by investing in alternative payment types with the support of Payit by NatWest.
Mike Mann, FD of Williams stated: “The cost of accepting card payments has increased massively in the last five years and this has driven us to explore other means. That’s where Open Banking offers us a unique opportunity.”
Williams first implemented Open Banking single immediate payments two years ago with Payit by NatWest. It has already seen significant cost savings of £65,000 on £4.5m of payments from an original project outlay of £20,000. This is set to rise to a saving of over £250,000 annually when the company hits its target volume, forecast for the end of 2023. Williams is now trialling Variable Recurring Payments (VRPs).
Payit is one of a few Open Banking Payment Initiators to trial the new Variable Recurring Payments (VRPs) feature as part of the Open Banking roadmap. VRPs allow third party providers (TPPs) to initiate a series of payments for a customer of different amounts and at different times. Providing payers with greater control and greater transparency, VRPs streamline the experience of making regular open banking payments.
Customers have better control over payments as they can ask their TTP to cancel the recurring payments at any time. Enabling efficiency and ease, customers’ details are also secure and protected as their bank and/or card details are not saved down for future use.
NatWest Group is the first UK bank to go beyond the requirement for banks to provide VRPs for sweeping, whereby payments are made between two accounts in the same person’s name. Unlike a direct debit or CPA (continuous payment authority), a VRP lets customers safely connect authorised Payment Initiation Service Providers (PISPs) to their bank account so they can make payments.
For businesses, VRPs differ to open banking as TPPs can only initiate single immediate payments and customers have to authenticate each payment separately. Harnessing the benefits of open banking payments such as immediate settlement and no data burden, the development of VRPs means that open banking can be applied across more use cases. They can enhance the experience for customers looking to collect recurring payments more easily, and be more cost effective*.
Businesses can choose to offer VRPs in two ways: user driven as a one-click experience, and bill management. In the first instance, the payer makes a payment to a retailer without the need to visit their online or mobile app each time to authorise a payment. This saves business owners both time and resources when settling payments.
VRPs also help with bill management. They allow businesses to set up an arrangement with a retailer to take payments to cover the cost of their service or product, reducing the time spent on accounts and invoicing. VRPs are at the centre of the latest open banking-enabled technology benefitting businesses, providing a flexible alternative to direct debit and credit cards, alongside lower fees, no chargebacks and immediate settlement.
The capabilities that VRPs provide means both businesses and customers can gain greater control over finances. The fact that open banking payments cannot leave you overdrawn guarantees peace of mind, and that no personal data is shared due to the bank grade security. VRPs also provide customers with transparency and control. Much like a direct debit, once set up, customers do not need to be reminded about upcoming payments and can view VRPs via their online and mobile banking apps, revoking payments at any time.
Mike Elliff, CEO of Payit, comments: “This an exciting opportunity to demonstrate Payit’s position at the forefront of open banking innovation. Afterall, innovation is at the heart of what we do, helping merchants and customers with sending and receiving payments.
We are looking forward to working with Williams Trade on this trial. It will demonstrate the potential of VRPs which can be reached by adopting new technologies in the payment space.”
Mike Mann, FD of Williams says: “We’re excited to be a part of this cutting-edge pilot. VRPs (or to use our terminology, Digital Debit) allow us to offer significant benefits to our customers; longer terms, higher credit limits, automated account management - all while reducing our costs, improving cashflow and reducing risk. This has changed our view of the payment journey from being a necessary evil to a customer service USP.
“The team at Payit, along with our web developers and our payment partners PayByLink BV have worked hard to optimise the customer journey, and we are rolling this out initially to our credit account holders, eventually adding it as a Point-of-Sale in-branch frictionless payment method, which we believe our customers will love.
“We’ll be gathering feedback from all our Digital Debit customers to enable the pilot team to make any improvements before the full release later in 2023 and we’ll use the pilot as a case study to promote awareness among our customers and other merchants.”