“Payment innovation isn’t about replacing card payments, but enhancing them,” writes Donal McGuinness (pictured), CEO of Prommt
Even with the fast-growing popularity of open banking and emerging fintech innovations, card payments continue to be a powerful force in Europe. In 2023 alone, over 82 billion card transactions were processed, amounting to nearly three trillion euros. By 2026, studies suggest that cards and digital wallets will be vying closely for market dominance. Despite the rise of new payment methods, cards continue to play a central role in Europe’s evolving financial landscape.
It’s easy to see why. A recent Forbes Advisor study revealed that 70 percent of people prefer paying by card, and 76 percent are more likely to support businesses that accept them. On top of that, 58 percent admit they tend to spend more when using a card. The convenience, security, and familiarity of card payments keep them highly relevant for businesses and their customers.
As payment technology evolves, so does the way we use cards. Mobile and contactless payments are becoming the norm, and wearable tech – like Apple Watches, fitness trackers, rings, and keychains – makes paying with just a tap even more convenient. Payment innovation isn’t about replacing card payments, but enhancing them.
While people are eager to embrace new payment options, they still appreciate the ease and reliability that come with using their cards. Features like tokenization, Strong Customer Authentication (SCA), and two-factor authentication (2FA) are essential in upholding that trust.
Working Hand in Hand: The Orchestration of Card and Open Banking Payments
Despite the rapid rise of alternatives like open banking, card payments aren’t in competition with these innovations – they complement them. In many cases, card payments pave the way for open banking by offering retailers and customers a secure and familiar starting point, making it easier to adopt more advanced payment solutions.
Open banking excels in handling high-value transactions, providing a secure, fast, and cost-effective option. Cards, on the other hand, are perfect for smaller purchases. With smart payment orchestration, retailers can automate how payment options are presented based on transaction value, location, or type. They can easily set automatic follow-ups for failed transactions or abandoned carts, giving customers a choice between bank or card to complete the payment.
This approach optimises payment success rates while helping businesses cut down on high operational and scheme/interchange costs. It simplifies payment administration and mitigates risks like fraud, chargebacks, and data breaches. For customers, it delivers greater control, convenience, and security – eliminating the need to share sensitive card or bank details over the phone.
For example, one of Prommt’s clients, a major UK motor group, implemented open banking payments in late 2022 to better manage high-value card transactions and offline bank transfers. In their first quarter, they processed approximately £1 million through Pay by Bank. As they refined their approach, they gradually increased the transaction value threshold, and now, thanks to payment orchestration, any transaction over £5,000 is automatically routed through Pay by Bank. This has replaced manual bank transfers, streamlining reconciliation and speeding up the fulfilment process. The results have been impressive – what started as £1 million in the first quarter has grown to over £3 million per quarter today.
Interestingly, despite Pay by Bank surpassing cards in transaction volume, card payments remain the preferred method for deposits, servicing, and parts sales. In fact, card transactions have held steady, even seeing a slight increase, demonstrating that both payment options can coexist and thrive without diminishing the importance of card payments.
In conclusion, the future of payments isn’t about one solution replacing another; it’s about giving merchants and payers the flexibility to choose the best option for their needs. As we look ahead, card payments are here to stay. Their ability to adapt to changing consumer preferences, work seamlessly with emerging technologies like mobile wallets and wearables, and complement innovations such as open banking, ensures they remain integral to the payments landscape.
