SME online retailers can save £19,000 a month on transaction fees – Yolt

07 Feb 2022

Open Banking technology can help small and medium-sized online retailers (SMRs) save an estimated £19,000 by reducing transaction fees associated with payments providers such as AMEX, Mastercard and Visa, according to research from one of Europe’s leading Open Banking providers Yolt.

On average retailers pay a transaction fee of approximately 1.8% across all different payment types, with the highest charges found in Buy Now, Pay Later payment methods (3.2%) and debit cards (3%). Small online retailers in the UK process approximately 217 sales a day – increasing by 24% if that retailer also happens to have both an online and in-person presence. Taking into account just the most popular payment providers (AMEX, Mastercard and Visa), the average small business will spend more than £22,000 a month on transaction fees, costing the entire industry an estimated £66 billion every year.

“The retail industry has been incredibly hard-hit by the economic challenges of the past few years,” said Nicolas Weng Kan, CEO of Yolt. “Small businesses in this sector in particular are likely still finding their feet and recouping losses.”

The adoption of Open Banking technology could significantly reduce these costs, as it does not utilise commission-based transaction fees, providing lower and more predictable costs to the retailer.

Weng Kan said: “Open Banking technology can provide solutions which alleviate common financial stressors on these businesses and allow them instead to focus their spending on strategies to improve growth.” 

Open Banking could also help alleviate other pressures. For example, SMRs spend on average 18 hours a week processing refunds. At present, it takes nearly three days to settle these with a payment provider. However, Open Banking technology can make these refunds instant.

Yolt’s latest research revealed that approximately one-third of online retail SMEs (34%) also experienced fraud in the last year, including supply chain fraud (64%), authorised push payment fraud (42%), account takeovers (40%) and cyber-attacks (30%) – losing an average of £4,257 a year. With the introduction of Open Banking technology, many of these incidents of fraud could be avoided, providing further savings to recovering SMEs.

As part of Yolt’s research, 200 senior leaders of B2C online retailers with 50-249 employees were interviewed between 26 May and 2 June 2021.