Taking payments has always had a cost attached to it.
The actual cost of taking the payment - as charged by the merchant provider which can be in the range of 1-2% for a credit card payment taken on site.
For a typical dealership accepting 150,000 per month in payments in this way, this can easily cost £2-£3,000 per month!
But that's only the start of the costs.
You still need to process the payment - which takes time - and can have customers queuing whilst the card machine is processing. This is a typical issue at 5pm in a busy service department.
The dealership team need to process the payment and later match these to the invoices at end of day.
And you'll not receive the money until the following day.
Dealers may mitigate these issues by taking payments online. But, merchant costs from third parties such as Stripe, can be double the cost of taking a credit card in person!
Bank transfer is a good option, but relies on the customer using his online banking to make the correct payment, to the correct bank account with the correct payment reference! Someone at the dealership needs to monitor the bank account and process all payments made into their Dealer Management Systems.
What is this ?
Simply a dealer can send an email with a call to action to pay.
If the customer clicks the button and he will be prompted to select his bank.
Then, the magic happens!
Their online banking will automatically open, he will then be prompted with a message such as "Confirm payment to Fred Bloggs Motors for £100?".
Confirmation takes place through face id or a fingerprint and is done in seconds.
No exchanging of bank details, no mis-typing of amounts or references.
The money is then instantly transferred from their bank account to yours.
But that's just the start.
The payment is automatically processed in Navigator against the invoice and processed into the accounting for automatic reconciliation.
It's dead simple for the customer, and also zero adminstration for the dealer!
Better still - merchant rates can be up to 1/10th the cost of taking a credit card payment!
And it doesn't have to be online only either! A QR code on an invoice can be scanned to do the payment from a mobile phone directly!
In short, Open Banking promises to revolutionise the way dealer's accept payments and provide lower costs, better customer service and high levels of efficiency!