A couple of days ago, the European Banking Association outlined plans to launch a pan-European electronic payments product called myBank for online shopping, enabling buyers and sellers all over Europe to complete transactions through their Internet Banking portals. Click here for more details.
I predict that myBank will be a hit.
No, not because it’s innovative – it isn’t. This non-card alternative payment method has been around for several years. There’s at least one provider of such payments in the USA (Moneta), UK (eWise), Netherlands (iDEAL) and India (BillDesk). Called ‘Secure Vault Payment’ or ‘SVP’ in the USA, these payment methods connect online shoppers with Internet Banking portals of their domestic banks from where they can make payments to merchants by using their regular Internet Banking credentials. They offer several advantages over card-based payments to shoppers and merchants alike and have been gaining a lot of traction in recent times. Click here to see how SVP works.
Ironically, for all the hype around its entry into payments, Google uses an SVP – and not Google Checkout – for receiving payments for its AdWords advertising program! But, I digress.
Where myBank trumps all incumbent providers is in its awesome geographical reach and inherent ability to gain consumers’ trust.
While domestic transactions are a given, myBank can also facilitate cross-border transactions within the EURO-zone. As far as I know, myBank is the only multi-country SVP payment in Europe or elsewhere.
Coming from a trusted banking alliance like EBA Clearing, myBank is very well positioned to address a major hurdle standing in the way of mass adoption of SVP, namely lack of consumer trust. I know many consumers who avoid SVP because they’re wary of being ferried around their respective banking portals by third-party providers. They see potential risk of exposure of their Internet Banking credentials in the hands of these providers who’re often venture-funded companies in near-startup mode. This could well be a perception problem since I’ve been assured by many providers that they can’t view usernames and passwords entered by consumers into banking portals. However, I haven’t seen such a reassuring message in the normal payment workflow of secure vault payments. Besides, in the process of providing concierge service during the checkout process, SVP providers do seem to be ‘looking over the shoulders’ of consumers as they enter their Internet Banking credentials, so it’s open to question how many consumers would take their assurances at face value. Consumers shouldn’t have any such apprehensions with a product like myBank that belongs to a consortium of banks.
By using SEPA / PE-ACH rails, myBank shouldn’t cost merchants any more than credit / debit card fees. Therefore, merchant acceptance of myBank should be a cinch.
Overall, myBank seems to have a bright outlook. If its vision is executed well (Probability = 0.9) and on time (Probability = 0.5), incumbent SVP providers in the Eurozone will have a lot to fear from myBank. They’ll need to find ways to differentiate their offerings to survive the almost certain onslaught of EBA Clearing.