While the pandemic has largely accelerated the development of online sales, open banking has revolutionized payment and provides innovative solutions for e-merchants.
The pandemic has undeniably accelerated the development of e-commerce: among those under 35, a third of consumption is now done online, according to the BPCE Digital & Payments Barometer. In 2021, the French spent €129 billion online, up 15.1% on the year compared to 8.5% in 2020.
A double-digit growth that is mainly explained by a profound change in consumption habits associated with successive confinements. With the closure of so-called non-essential businesses, the French have become part of their online shopping, effectively endorsing omnichannel. Taking advantage of favorable regulatory developments and investor appetite for the unlisted, many services, mainly financial, have emerged to support the development of online commerce.
Open banking revolutionized online payment
The European Payments and Services Directive (PSD2), which came into force in 2018, established open banking. Open banking is a technology that allows banks to securely share their data with other players in the financial ecosystem, such as fintechs. Before the massive deployment of open banking, the payments universe was historically dominated by traditional players, such as banks.
By ratifying better cooperation between banks and fintechs, open banking has promoted the commercialization of innovative services for the benefit of consumers, such as e-merchants. In particular, it led to the development of new payment solutions, a key lever in converting visitors into buyers. With the development of online sales, issues related to streamlining the payment step and transaction security have become crucial for merchants.
Simplifying payment and limiting fraud
While the bank card remains the essential online payment method, consumers are increasingly turning to 100% digital solutions, as evidenced by the success of fintechs Revolut and Lydia, and the solutions offered by GAFAs such as Apple. Pay or Google Pay. By seamlessly integrating into the consumer’s purchase journey, Buy Now Pay Later (BNPL) has also contributed to the renaissance of e-commerce. BNPL accounted for 4% of the value of online sales in 2020, an increase of 20% over the previous year. An opportunity for e-merchants to retain their customers while attracting younger ones: today, two-thirds of those under 35 use this payment solution.
In 2020, payment fraud generated over 6% lost revenue for 38% of e-merchants. It is on the rise in more than one in two traders. If it is impossible to eliminate it completely, the advent of open banking also marked the development of tools to limit hacking, such as ensuring the connection between banking establishments and new financial services.
Optimize cash flow management
Open banking has also contributed to the emergence of quick financing solutions adapted to the economic model of online platforms. The credit score made it possible, in particular, to solve the problem of payment defaults through the direct analysis of consumer solvency. This is also the case with bank transfer payment solutions, which also make it possible to overcome the problem of maximum limits. An effective way to avoid payment refusals and guarantee the shopping experience for both sides. It should represent 15% of online payments by 2025.
Open banking simplifies and makes managing cash flow less onerous, the nerve of the war for merchants who face seasonal activities and depend on peak consumption periods. A method of financing already well known across the Atlantic, Revenue Based Financing (RBF) has recently emerged in Europe. It allows e-merchants to obtain financing in the form of cash advance, in less than 48 hours, and adapts to seasonality, offering them reimbursement based on their monthly turnover. A small revolution for e-merchants, who can finance their growth almost instantly.
All these innovations undoubtedly contributed to the growth of the e-commerce sector in 2021. In total, more than a quarter of the fundraising was carried out by French startups in the consumer, payments and data sectors, and e-commerce is expected to continue. to go up. According to the Federation of Professionals in the Sector (Fevad), it may thus present an annual growth of 20% in 2030.
While containment has certainly played its part, the rise of e-commerce in recent years is more structural than cyclical, and open banking has played a leading role. Enabling platforms to better understand consumer expectations and providing them with the means to meet them, but also giving them the means to fund their growth. E-commerce has all the keys to reinvent itself!