Open Finance Community payment challenge: Token

Open Finance
21/11/2022 interview
Todd Clyde Token CEO

Qorus and Capgemini have identified the leading fintech companies for the payment challenges they organize for the Open Finance Community. One of them is Token and its CEO Todd Clyde tells us more about it.

About Token

A leading open banking enabler for the payments industry, Token is driving the shift to faster, fairer, frictionless payments by helping payment providers efficiently launch and scale with open banking capabilities. Token’s whitelabel-ready platform is purpose built to enable PSPs, gateways and acquirers to easily launch and scale account-to-account payment propositions. Token’s best-in-class connectivity for AIS and PIS in the UK and Europe reaches over 250 million potential end-users of open banking services in 14 countries, all through a single API and interface. Token processes tens of millions of payments annually for over 80 customers and partners. Token also provides access to aggregated bank account and transaction data for smarter onboarding and deeper insights. With Token’s complete open banking toolkit, businesses can create new capabilities and revenue streams by blending API-based payments and data to reinvent financial experiences.

What business problem do you solve? Why is it important to your clients? 

With account-to-account payments, money moves directly from a consumer’s bank account to a merchant’s bank account. Open banking APIs remove the historic barriers of account-to-account payments by connecting to existing banking infrastructure. This makes it easy to embed bank transfers within a purchase without having to navigate fragmented banking rails across Europe. And, by removing intermediaries, open banking enabled account-to-account payments eliminate unnecessary cost and friction. Open banking payments enabled by Token enhance the customer experience and boost conversion for merchants. 

With open banking payments, there is no onboarding, registration, training, or repetitive data entry. Instead, consumers authenticate most open payments using their face or finger, directly in their banking app through seamless app-to-app redirection. After selecting ‘pay by bank’ as a payment type during an e-commerce transaction, 85-95% of consumers proceed to the next step in their checkout, which sees a 99% user authentication success rate and reductions in false declines. These success rates reinforce the intuitive and frictionless nature of open banking payments for consumers – which is ultimately the driving force behind consumer adoption. 

For merchants, open banking payments not only offer cost savings but better cash flow by settling instantly or within minutes, rather than days. Open payments also have bank-grade security baked in. Token’s open banking payments platform is 100% API-based and never relies on screen scraping. Payments are authenticated directly by the consumers’ bank, leveraging existing KYC, AML and screening. Merchants never share or store confidential cardholder or user details, which reduces the risk of fraud, data breaches and mobile hacking. Incoming funds can also be allocated seamlessly for faster, easier reconciliation than invoicing and accepting bank transfers. 

Against a backdrop of rising payment costs, Token is making account-to-account payments a true competitor to cards and alternative payment methods. Open banking payments are 2-20x lower cost than traditional payment methods and, through Token, they are independent of payment values. In addition, there are no scheme or interchange fees or additional expenses related to PCI compliance and chargebacks. Token estimates it has delivered up to €90 million in savings for merchants to date. For some time, payment service providers (PSPs) have been squeezed between the card schemes’ rising fees and merchants demanding lower costs. The result: PSPs’ margins are eroding. Consumers and merchants are hungry for open banking payments, leaving payment service providers with two choices. The first is aggregating local account-to-account payment APMs (which pay notoriously little back to the gateway). Alternatively, Token’s turnkey, whitelabel-ready solution is uniquely enabling payment providers in the UK and Europe to efficiently launch open banking payment capabilities while generating greater revenues and higher margins than aggregating other alternative payment methods. 

Token also offers payment providers sophisticated, reseller-friendly features, such as merchant management, customer billing, certificate management and programmable authorizations. Partners can also choose whether to use Token’s license or their own in the UK and Europe, and whether to use Token’s embedded payment flows or to design their own. With Token’s broadest out-of-the-box open banking connectivity in the UK and Europe, merchants, PSPs and banks are also creating new capabilities and revenue streams by blending API-based payments and data insights to identify loyal customers, trigger offers or lending services based on holistic wealth analysis, build value-added programs, and reinvent financial experiences faster and more efficiently. Token also works with banks to help them realize open banking opportunities, build their own account-to-account payment propositions, and compete within the new financial layer by going beyond data access to reclaim their position as the center of the payments universe and the linchpin of consumers’ financial lives.

Our turnkey platform is uniquely designed to help payment providers efficiently launch and successfully scale with open banking payments while generating the highest margins and greatest revenues.

Can you briefly describe your product or solution and in which countries do you operate?

Token is an open banking payments platform. We provide out-of-the-box open banking connectivity (AIS and PIS) to over 80% of bank accounts in 14 countries across Europe, all through a single API and interface. At present we operate in the UK, France, Germany, Ireland, Netherlands, Poland, Latvia, Lithuania, Estonia, Spain, Portugal, Belgium, Hungary and Austria. We will announce more countries two weeks from now.

What is your core value proposition? What are the unique features you offer to your customers? 

Our turnkey platform is uniquely designed to help payment providers efficiently launch and successfully scale with open banking payments while generating the highest margins and greatest revenues. Our customers can plug and play, white-label, or use our technology to build their own open banking payment propositions. Customer can also choose whether to use our license or their own. Our ‘platform for platforms’ also has key reseller features built in, like merchant management, customer billing, certificate management and programmable authorizations.

Providing that your solution has already been implemented in financial institutions, which companies have already adopted this solution?

Token's customers and partners include Mastercard, HSBC, BNP Paribas, Nuvei, Paysafe, Computop, Sonae Universo, Zoho Books, EDP, Contis, Ecommpay, Everpay, Rewire, Straal, Noda, Prommt, EchoPay for Clover, Deutsche Payment, Vyne, Volt, Inpay, Shopping OS, SEPA Express, and other major payment service providers, gateways and acquirers.

Can you describe in a few words one of these collaborations (What was the objective? What were the main challenges? What results did your client obtain thanks to the implementation of your solution?)

Token’s partnership with leading global financial services provider BNP Paribas is an excellent example of how the open banking technology provider is leading the market in powering the shift from cards to bank payments and building a whole new open payments ecosystem. Payments are a continuing, complex challenge for merchants, and BNP Paribas saw the opportunity for a new solution to allow e-commerce merchants to accept instant A2A payments. The bank looked to Token – with its focus on payments, connections to almost 100 French banks representing about 80% of payments’ accounts in France, and understanding of the retail payment channel and technology stack – as their partner. 

Together, Token and BNP Paribas launched Instanea, the first online payments service combining the power of SEPA Instant SCT and PSD2 APIs, two major initiatives from the European Payments Council. Instanea is a turnkey instant payment initiation solution that delivers A2A payment capabilities. Using Token’s white-label solution for merchant onboarding, reporting, and billing, Instanea dramatically enhances the speed and security of transactions for merchants and consumers across Europe. BNP Paribas’ Instanea, powered by Token’s unified and unrivalled breadth of API connectivity, is innovative in delivering instant payments at scale, enabling BNP Paribas to reach merchants across its domestic markets. 

Instanea's success relies on making sure that other banks are ready to fulfill their side of the payment. In open banking terms, payments are more demanding than data. Therefore, when it comes to payments, reliable API performance is essential. However, PSD2-readiness across Europe is still patchy, and while data APIs have broadly stabilized, payment APIs have taken longer. To maximize API performance, Token conducted extensive discussions and testing with different banks throughout this project. Using Token’s award-winning API, Instanea easily integrates with popular shopping carts and payment gateways to deliver immediate payment settlement with enhanced security online and across Castorama and other brick-and-mortar stores in France.

What is your business model and how easy is it to duplicate to additional geographies? 

Token's best-in-class connectivity and technology underpin some of the most successful open banking payment propositions in the UK and Europe.

Where do you see your fintech company in five years? What impact or difference are you trying to achieve for financial institutions in your portfolio?

Token's vision is to be the open banking enabler for the global payments industry. Our aim is to help payment providers and financial institutions unlock the potential of the most significant opportunity of open banking: open banking payments. We also aim to help financial institutions compete as fintechs with fintechs by using open banking to drive stickiness and reinvent financial experiences. For Token, success looks like open banking payments (underpinned by Token's technology) becoming a truly mainstream payment method on a Pan-European, and eventually global, scale.

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