Payment Experience: The Two Sides of the Coin

Shop owner: Hello. Welcome to, the place where you get the shirts that you want! How can I help you?

Shopper: Well, I´m looking for a safe way of getting a couple of nice linen shirts. I always get a new couple of shirts for the summer, and for the last 7 years I always get them in your shop. I just love it

Shop owner: I´m happy to hear that 😊 We have these new arrivals in red and yellow. Would you like to know more about them?

Shopper: No, that´s fine. They look really nice. I need them in a Medium size, and I would need to know the price of course

Shop owner: Despite being part of the new collection, we have them with 20% discount, just 30€

Shopper: Sounds great. Shall we proceed to payment? I just have cash, tough.

Shop owner: Well, then we have a little problem. Don´t forget this is an online shop, and if there´s one thing we just cannot accept is bank notes and coins, regretfully.

Shopper: Daaah, silly me, of course. I have a Bank Account, tough. I receive my salary there, I use the card to withdraw cash from the ATM and I even use the same card to shop in the supermarket. Would it work?

Shop owner: Well, depends. Initially, not. For a normal bank account ATM card to operate online, the card must be operated by a credit card operator, even if your bank account has no credit associated.

Shopper: Credit card operator? You mean like Visa or MasterCard? But I don´t have any credit amount associated with my account, it´s just a simple, normal account… a sight account… nothing different than a simple saving account…

Shop owner: I know, I know… but without the mediation of a credit card operator, you cannot pay online

Shopper: But why?… I mean, my money is there, it is obviously there in digital form and not like paper notes and metal coins… I mean, I can even send a money transfer easily and free of charge… Why can´t I pay?… I don´t quite get it.

Shop owner: Yes, you can send a transfer. And I could send you the product. But these would be “separated events”, linked by the trust that we mutually have. You can send me the money if you trust that I will send you the product, and vice-versa. But it´s not the spirit in a purchase: we should be able to give each other the money and the product in a single transaction. And maybe you can send money to my bank account, but not in the context of a purchase. It would be like giving me the money and coming for the product the next day, without an invoice or any proof of payment at all.

Shopper: So the credit card operator…

Shop owner: They do operate your card, so they actually know how much money there is there. Since they have access to your funds and to that info, they take the funds from your account and send them to me. This process is not immediate, and it normally takes a couple of days, but it can take weeks. Besides retaining the money of your purchase before sending it to me, they also charge a fee for this service

Shopper: Let me see if I got it: the card operator charge me in the moment, but keeps the money for days before making it available to you. And they even charge for this? Why can´t I just pay from my bank account!

Shop owner: Well, now you can. We are recently accepting a new payment method. It´s not a new card operator, or a new e-wallet, which operates under a similar principle…

Shopper: What is it then?

Shop owner: It´s called Open Banking Payment Initiation. SignD, an Austrian Start-up has right now the best coverage of banks within the EU with this method… they currently cover the XX countries of the EU and over XX banks within. With service, you can pay DIRECTLY from your bank account.

Shopper: Really? But what´s the difference with a credit card operator then?

Shop owner: They don´t access or keep any money at all. What they do is basically make use of the new PSD2 EU regulation, which makes Banks share account information with technology providers, like SignD. The technology provider create like a “temporary link” between my shop and your account. The link last just the transaction and it is closed then. You pay, I deliver the invoice, and the transaction is done. Just like with a credit card, but without the need of a credit card operator… Not even a card! To make it as safe as possible, this operates with the the Bank App in your mobile phone and all its security measures!

Shopper: So it´s cheaper, safer and more accessible? Please let me pay so I can get my shirts as soon as possible! 😊