Open banking is expected to become the most popular payment method at car dealerships by 2030.
The new payment technology allows customers to pay directly from their personal bank accounts to a dealership’s account, using their banking app, rather than relying on third-party provided debit or credit cards.
Dealerships stand to benefit from halving their transaction costs and reducing their exposure to fraudulent card transactions, according to Bumper.
“Customer transactions are already being transformed by open banking in other retail industries. Due to the high invoice values associated with the automobile, we expect it to become the dominant form of payment at dealerships by the end of the decade,” said James Jackson, CEO and co-founder of Bumper.
Although open banking is relatively new, it is growing exponentially in the UK with 4.5 million regular users across all retail sectors and 1 million new users being added every six months, according to the Open Banking Implementation Entity.
Jackson added, “Car buyers using open banking can make payments online in seconds using only their bank account credentials. Additionally, since these payments require bank authentication in a customer’s banking app, it makes fraud much more difficult, providing better protection for dealers.
“While dealerships offering open banking services can expect to see their transaction costs cut in half by removing the high fees associated with card payments. Other benefits include more secure digital payments, reduced dealer exposure to fraud and full GDPR compliance.”
Bumper expects dealerships to increasingly offer customers the ability to pay deposits and balances on car purchases, after-sales invoices and add-ons such as GAP and extended warranties.
Starting this month, Bumper will provide dealerships with open banking that is fully integrated with REALtime Communications.
“The addition of open banking further expands our suite of digital payment options, alongside Pay Now and Pay Later, allowing dealers to offer customers the payment option that best suits their personal finances. “Jackson said.
Bumper integrated with Keyloop’s car dealer management systems last year to facilitate the provision of digital after-sales payments.
Bumper, which officially launched in April 2021 after being rebranded as Auto Service Finance, has been made available in Autoline and Drive Dealer Management Systems (DMS) through the new integration – providing access to its Buy Now digital solutions , Pay Later and PayNow Services.