Paying has never been so simple: At Farfetch, you can now pay directly with your bank app.
Farfetch is known for its extensive selection of luxury, from the world’s best brands to emerging designers, brought to customers everywhere and opening doors to a world of items they can discover with the simplicity of a global marketplace — easy to navigate and straight to the point. It empowers the consumer without being loud, helping with choices without interfering with their individuality and personal preferences. This perfectly describes my experience as a shopper, so the payment step should be just like that. OK, I am the Payments Manager so it might sound biased, but this is exactly why we are relentlessly working to improve that step — never taking anything for granted, always questioning whether our payment solutions are fit for purpose and how we can make them even better for our customers. The customer is at the centre and should always be the starting point for everything we do. With that in mind, we are constantly looking for better ways to simplify the consumer shopping experience with payments, and this is where Open Banking comes in.
What is Open Banking?
At a high level, Open Banking is a regulatory framework that enables consumers to pay directly from their bank apps. Payments are instant, with funds transferred in a matter of seconds. The goal is to execute the transaction securely for both merchants and consumers in just a few clicks, without intermediaries.
Open Banking enables consumers to permissively ‘open up’ their bank account to licensed third parties, via APIs, in order for said third parties to provide a desired service — such as initiating a payment. This solution, made possible by Europe’s PSD2 regulation in 2018, is now live in 60 different countries, with various names and specific domestic solutions tailored to the consumers’ needs and preferences in each location.
The user experience
What the consumer sees, when they’re choosing a payment method at Farfetch´s checkout, is Instant Bank Transfer with Volt´s logo.
Instant Bank Transfer is available at the Farfetch checkout In the UK, Germany, and the Netherlands on web portal, mobile web portal and iOS. From the moment the customer reaches the payments page, Volt will appear as one of the payment options and from this point, customers can choose Instant Bank Transfer and place the order. The customer is seamlessly redirected to Volt to choose the bank, and after that, the authentication will happen on the customer bank app, and it’s done
Compared to traditional payment methods, the Pay by Bank experience is faster, easier and more secure. Consumers don’t need to enter card details or undergo additional authentication steps. All they need to do is select their bank and confirm the pre-populated payment in their bank app.
Consumers have several advantages when using this method compared to others, such as:
- Ease of Use: Just a few clicks.
- Superior User Experience: No need to authenticate via 3DS.
- Security: The user is in control and authenticates via their bank app on their phone.
- No Fees: Customers don’t pay fees to maintain the method, as it’s essentially an automated bank transfer.
- Speed: Because payments settle near-instantly, they can be confirmed at lightning speed, helping to speed up shipping times.
When it comes to money flow, the transaction happens directly between the consumer’s bank account and the merchant’s bank account, in some countries in seconds. This is convenient for customers, given the possibility of controlling funds in their bank wallets. It is also very convenient for merchants, as the funds settle much more quickly than traditional methods, where funds settlement can take a few days. The fact that funds are transferred almost instantly allows purchases to be approved quickly, moving to ship without delays, as the merchant will not need to wait hours or days for funds to be captured before shipping parcels. This is another advantage for consumers.
Farfetch launched Pay by Bank in September 2023 in partnership with Volt, focusing on the UK, Germany, and the Netherlands. Since then, thousands of consumers have enjoyed the convenience of seamless bank-to-bank payments, representing an important step in our payment offering. It has become a popular option among consumers and is growing rapidly as more banks adopt the technology.
Open banking stats:
- There are 10 million active users of open banking in the UK (Open Banking)
- The total monthly value of open banking payments in the UK is £4.5bn (Open Banking)
- The total transaction value of open banking payments is expected to reach $330bn globally by 2027 (Juniper Research)
- In 2024, there are expected to be 64 million users of open banking in Europe (Statista)
According to several surveys, Gen Z is racing ahead of previous generations when it comes to the adoption of alternative payment methods. They consider simple actions like typing personal details or even a PIN a pain, compared to Millennials. (source)
While not everyone has a credit card, almost everyone has a bank account, so paying by bank is becoming increasingly popular, especially with the shift in consumer preferences driven by the simplification of user interfaces, and the fact that customers do not pay any fees for the payment method, unlike with a credit card, for example.
Farfetch is always looking for better ways to connect and serve its customers, offering payment methods that make sense for them no matter where they are, with user experience, convenience and security always in mind.