Underpay for Retailers (reward your customers, not your payment processor)
Jun 20, 2023
TLDR: ~3% of online retailers’ revenue is wasted as transaction fees. Underpay uses Open Banking to unlock this resource and deploy it towards marketing your brand, reaching new audiences and growing your business.
Transaction fees suck! It’s like a ~3% tax on your entire revenue base, skimmed right off the top, every single time your customer is compelled enough to finally pay you.
As a retailer, you’ve probably heard a lot about Open Banking in the last few years. Rightly so, as it’s one of the most exciting innovations in payments with a compelling value proposition to finally solve the transaction fee problem: ‘Add a Pay by Bank button to your checkout page and reduce transaction fees by at least 90%’.
For the uninitiated — Open Banking is a new technology that provides a genuine alternative to card payments by, essentially, ‘automating’ bank transfers:
Customer clicks a button on your checkout page
Their mobile banking app opens with all payment info pre-filled
They authenticate, using Face ID or similar, and click once to confirm the transaction
They are automatically taken back to your checkout page which refreshes to show that the transaction is complete.
3 clicks for the user, no extra admin for you — and the payment is at least 10 times cheaper than accepting a card. Any card! Any payment processor!
The benefits for stores stack up beyond cost:
Money arrives instantly in your bank account, no more waiting around for a week for payouts.
The customer authenticates every single payment so no fraud algorithms will ever randomly block them.
Chargebacks are not a thing.
Refunds are instant.
And it’s much better for consumers:
They are transferring the money to you, instead of giving you their card details and you charging them.
Therefore, their sensitive information which could be stolen/hacked/misused is never actually shared.
So why is Open Banking not on your checkout?
A ‘Pay by Bank’ button is a great idea that’s been picking up as the technology has developed (>9,000% transaction volume growth between 2018 and 2021 🚀).
But in e-commerce cards continue to dominate because, without a strong incentive to switch, consumers use the familiar option.
They’ve been habitually using cards for many years now, it’s fine… Annoying to type in the card details? Yes. Infuriating when transactions get randomly blocked? Absolutely.
But most of the time it just works, and it is the generally accepted thing to do. Plus, wallets like PayPal have removed much of the friction and fraud risk (at a significant extra cost to the retailer!).
So, what you, the online retailer, end up with when integrating a traditional Open Banking provider is having a payment method that is picked ~1% of the time, and likely only by consumers with a personal horror story of card fraud who really, really don’t want to use a card.
The business case under those conditions for a £10m retailer to integrate Open Banking is grand total of around (🥁) £6k in annual fee savings — before integration and administration.
How is Underpay different?
We re-imagined how this technology can be applied and designed our solution specifically with e-commerce and mass market retail in mind.
This starts with a simple question: Why should the customer want to pay like this?
Instead of the retailer keeping all of the savings of Open Banking (a strategy that doesn't work anyway), we pass some of the margin on to the consumer, directly incentivising them to select Underpay at checkout.
We do this in the form of easy-to-understand, valuable credit card-style reward points, creating a unique customer proposition:
For the first time, you don’t need to get a credit card if you just want to earn rewards directly on a purchase! Simply see our button at checkout, pay with your existing bank account, get valuable points instantly into your Underpay wallet .
We are bringing credit card-style benefits to the ~50% of e-commerce transactions that happen on debit. Unlike the debt-fuelled reward schemes of credit card companies, Underpay is open to anyone with a UK bank account - no new accounts, no cards, no credit, no catch.
And this is all presented in a slick checkout experience, made available to a segment of consumers whose only alternative to date has been to scour the web for cashback sites and coupon codes.
How do online stores benefit?
We still charge less than what you currently pay for basic card processing (and much less than any wallet like PayPal).
Because consumers actually want to use this, store are finally able to reap the benefits of the Open Banking technology such as faster payouts.
Our points are - by design - not cashback. They are a ‘credit’ to be used to offset the cost of your next purchase at any store that accepts Underpay. This brings you more customers from our network, and makes your existing customers more likely to buy again.
That is the crux of Underpay’s approach to Open Banking —use the transaction fee saving to incentivise consumer adoption of the technology, and structure the incentives in a way that benefits your brand.
Now, instead of savings of a few thousand pounds, the business case for integrating with Underpay for an e-commerce retailer is an annual revenue uplift of ~6% — that’s after marketing commissions on the incremental business we bring you.
Check out (pun intended) our business case calculator to see how much revenue that could mean for your business.
Does our mission resonate with you?
If you’d rather reward your customers than your payment processor and grow your business doing so, get in touch with our merchant integration team at email@example.com.
We’re launching in closed beta with a group of up to 50 growth-oriented, modern e-commerce brands in August 2023, we’d love to explore if your business could be one of them.
These first 50 partners will get the first £10,000 of payments completely free (0%+ £0.00 transaction fee) and amazing advertising to customers in our network.
Our waitlist has already received over 3,000 signups in just a few months and, at launch, we plan to bring you over 10,000 customers eager to spend their waitlist sign-up incentives (£5 off on us).
How does Underpay work under the hood?
When it comes to payments, it’s good to be considerate about who you work with.
Open Banking itself is a government-mandated technology.
The partners we work with to build the payment infrastructure of our solution are fully regulated and use industry-leading technology to perform Open Banking operations.
Our points programme is built around this core technology and designed to be consumer-friendly and attractive - worthy of its place on your website.
Making all this come together is a team with lots of fintech experience, backed by some of the best fintech Angel investors in the UK.
So, get in touch. We’d love to talk you through the details and show you how easy the integration process is.
Have an amazing day,
Dima, Co-Founder at Underpay