In this episode, we’re going to be talking about building a headless and transparent checkout experience with open banking. It’s a great episode you do not want to miss.

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Welcome to the 2X eCommerce podcast. The 2X eCommerce podcast show is dedicated to digital commerce insights for retail and eCommerce teams. Each week on this podcast, we interview a commerce expert, a founder of a digitally native consumer brand, or a representative of a best-in-class commerce SaaS product. They all have a tight remit to give you ideas that you can test right away on your brand. If you want to improve commerce growth metrics such as conversion, average order value, repeat customers, your audience size, ultimately, your Gross Merchant Value, or sales, we’re here to help you sell more sustainably. 

In this episode, if you’re in the UK, this will be important to you because we talk about open banking. Open banking is a way in which you unlock information and access banking technology via APIs. It’s a standard being developed and led by UK. I’ll give you a use case. I’m trying to pay for a utility like my electricity bill online. One of the most annoying things is their checkout process. It is not the best. Now, when you go through these services, there’s an option to pay with your banking app.

What happens is that checkout redirects a layer. It’s a one-click layer checkout, which will recognize the mobile banking app I have installed on my phone away or I select it and then my mobile banking app interacts with that checkout experience to make payments almost instantaneously. It depends on the user experience delivered by the app. That’s one use case of open banking. Open banking also gives you better analytics through reports on the way you’re using your banking app beyond what the bank has created.

My conversation here with Simone Martinelli, who is the Founder of a service called Volume, they’re providing open banking services for eCommerce merchants. In your checkouts, if you’re running big commerce or Magento and you happen to be in the UK, you can now pay with your banking app, pay with Monzo, and it would pop in as an option at checkout. It presents to users as another option. The nice thing about it is that it can be price adjusted because you pay less.

He mentioned the fact that you pay 0.5% In transaction fees versus 3% or sometimes 4% and 5% if you’re using something like PayPal for a transaction. The transaction or charges are low with open banking. I thought to share this conversation with you, particularly UK merchants as a way to test. The objective of this show is to give you ideas that you could test to improve metrics. Would this lead to an uplift in your conversions? Are people adopting to pay with their banks? Does that hit in adaption or do people prefer to pay with credits? It depends on who you’re selling to and what you’re selling. It’s nuanced.

This conversation is to get into what they’re doing, how they’re thinking about the checkouts essentially. He gives a few tips around best practices for your checkout. It’s an exploratory conversation around how the checkout experience should be with open banking. If you’re in the UK, this will be relevant. If you’re not in the UK, it may not be relevant. That’s why this is a bonus episode. I hope you enjoy the conversation. I shall catch you on the other side. Cheers.

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Simone, it’s a pleasure to have you on the 2X eCommerce Podcast. Welcome.

Thank you, Kunle. It’s a pleasure to be here.

Where are you dialing in from?

I’m dialing from London.

Where in London are you?

We have a small office near the Battersea Power Station. That’s beautiful up here.

It’s got the park, which you could pop in and go for a run and get fresh air. You’re the founder and CEO of Volume, which is a one-click checkout solution that integrates with open banking. You wanted to make Visa or Mastercard not a thing at the checkout any longer and allow people to pay directly with their bank account with one click.

That’s exactly it. Being an ex-Mastercard, it’s a bit weird to say it because I was at the other side of the table. That’s what we’re doing.

You’re an ex-Mastercard, trying to get rid of all your ex-colleagues.

That’s pretty much there. This is a long holiday after the hard work of the past twenty years.

Let’s go back to your beginnings, your background. You started in crypto. Should we speak to your beginnings and then we’ll try and see the evolution to the founding of Volume?

I’m Italian. I started my journey in payment in the early days of crypto when the value of Bitcoin was practically nothing. The only way to mine Bitcoin was to break down your PlayStation 2 and link it to your laptop so you could speed up the mining. Those were the good old days, let’s put it that way.

How many Bitcoin did you mine?

I don’t even want to know because they’re still locked in the old laptop at my parent’s place somewhere.

Let’s not go there.

That was obvious, a career in payment, that’s what I wanted to do in the long run. That’s how everything started.

You were 17 at the time. Did you go to uni? Did you need to think about payments? What was the trajectory?

I did a bit of uni. I was in computer science. I tried to go down that route. I turned out to be a better product manager than a developer. There’s a bit of a pivot there. When I moved to the UK, I started a PhD at Imperial College but it wasn’t my road so I dropped out. I started to join the FinTech industry and a Bitcoin startup.

Between that, we must not miss out on your stint at Mastercard. You were a product manager there. Also, WorldRemit, which is an international remittance company. As a product manager, it’s a creative space. You’re building. You’re responsible for what the next features in the product will deliver. What were your insights on Mastercard and WorldRemit from a product manager? Could you give us insights from both stints?

Product management is an exciting job because you get the chance to speak with engineers and customers. You need to be quite creative to solve your customer’s problems. Solving problems in a company like Mastercard means that you’re dealing with large eCommerce businesses across the world, from the US to the UK to Australia like Walmart or Amazon. We help them to accept and increase the checkout experience when they take payment from their customers. In WorldRemit, you’re working more on a B2C side, in a consumer proposition helping friends and family to send money home with a convenient exchange fee.

It’s a different angle that gives us a bit of an overview of how the payment landscape is surely complicated but also the opportunities that are there. We got passionate about something when we were at WorldRemit. It is about the hidden fees at the checkout. What nobody knows is that whenever we pay £100 online to buy a t-shirt on Amazon or any other eCommerce website, there are fees that the eCommerce businesses are paying to accept these payments, which ultimately creates a non-sustainable financial network. That’s something that we want to change at Volume.

Sometimes we’re talking about 3%.

It can go even higher. It can go up to 6% if you include the fees for currency exchange and different types of cards. The interesting fact is that we calculate that in the UK, the average hidden fees paid by online shoppers are £850 per user, per person. It means that we can enable the merchant to pay less and their customer to pay less if we build a financial inclusive network.

Let’s start with Volume, which is what you founded. When did you start Volume?

We started in 2021.

You’re the universal checkout experience for commerce. That’s how you phrase yourself on your Crunchbase. At this point, you’re a checkout for eCommerce stores. Do you work beyond eCommerce? Do you work with service providers with your one-click checkout?

Yes. We do work with two other partners, one is a service provider and the second one is an eCommerce platform like BigCommerce for instance.

Why open banking? A lot of strides have been made with open banking over the years. What are the benefits of open banking and how do you fit in with Volume?

We believe that open banking will open up the next generation of payment. The why is simple. There is an interesting article published by a16z. It elaborates clearly what it takes to be the universal checkout, which ticks all the boxes. The first point is around convenience. Somebody needs to help eCommerce merchants to save the fees applied by Mastercard, Visa, Stripe, and all these guys.

The second is the real-time settlement. We are in 2022. We cannot wait seven days to receive the money from our customer. It needs to happen in a matter of seconds. The third one is the lack of fraud. At the moment, card rails are full of potential vulnerabilities that create a non-secure experience. Open banking and real-time payment enable exactly this functionality for merchants. That’s why it’s the next big thing in payment.

You’re addressing this issue with technology, which can be integrated into digital technology on the web. Do you see this making its way at physical checkout in retail? At the moment, you either default if you do not want to use credit as a debit card.

We do see an opportunity for in-store. The challenge that we’re having and the entire industry is having is that the QR code is not a thing. I don’t know about you, Kunle, but do you like to scan your QR code when you pay online when you can just tap your card?

I’ve not tried it. It’s not become a habit, let’s put it that way.

In Asia, it’s taking off. US, UK, and European markets are completely different. There is particular attention to the user experience. QR code has been around for over ten years and has not yet taken off. We need better technology before we need to enable in-store payment.

On the web, what’s your data telling you? You’ve been in the market for a while now. Where are you addressing the issue at the SME level enterprise? Where do you see a lot of activity now, an opportunity?

We’re focusing on SMEs. Our pitch for SMEs is simple. We help them to sell more and spend less. Sell more because we increase the conversion rate at the checkout and spend less because we use open banking rails instead of the traditional card rails. We want to support these SMEs. They need much more help than the one they’re getting. Otherwise, we will end up with Amazon owning every eCommerce piece on the planet.

Why do you think Amazon will take all these?

It’s because they’re using their position as a market leader to kill anybody else. Shopify did a great job to support the SMEs but nobody helped the SMEs at the checkout. We want to be the Shopify for the checkout.

As much as Shopify has a handful of third-party integrations, a lot of Shopify merchants don’t even think about moving off Shopify’s default checkout flow. How do you think Volume will appeal to non-Shopify merchants? Do you have any plans to work with the Shopify payments team to get integration with Shopify? Are you looking at Shopify or not?

We do look at eCommerce platforms and Shopify is one of them. To clarify, we’re not competing with them. We have a win-win solution where Shopify offers the website, the content management, the logistics, the order management, and we do the one-click checkout on their website. We got a plugin on Shopify. We start with the other eCommerce platform. BigCommerce is the first on the list where we start because they have an open-source platform. That’s where we’re going. We believe in creating a financial inclusive network.

The reason I’m asking is I sat with the founder of Fast, the one-click online checkout DOM. Their forecast was WooCommerce. They were not looking at Shopify merchants due to the barriers they put in. He also mentioned BigCommerce checkout.

We get compared quite often to Fast.co. The difference is that, in Fast.co, you use card rails. Their price is 3%. We go to the market with a price that is three times cheaper than cards and ten times cheaper than PayPal, which is 0.75%. If you compare these fees against the Stripe fees or Fast fees, we are the cheapest payment method at the checkout for the commerce merchant.

Lots of merchants listen to this show. Another question I have is can you use Volume side by side with other checkout solutions? Is Volume meant to be an exclusive one-click checkout for eCommerce experiences?

What we’ve seen is that eCommerce merchants have the possibility to add a payment method. Some brave merchants commission their entire payment method set and only lead Volume at the checkout. Why? It’s because the checkout experience is crowded. There are cards, Apple Pay, PayPal, Klarna, Affirm, and buy now pay later solutions.

Ultimately, this money all comes from the bank account of your customer. We connect directly with your banking app. What is the point of connecting to PayPal? Behind PayPal, there is still the bank account of the customer. What is the point of paying with Apple Pay if, inside Apple Pay, there is still the bank account of the customer? We enable this direct account-to-account payment, which is frictionless for eCommerce businesses and online shoppers.

This is why your proposition is interesting. Given the fact that it’s coming from their bank accounts, shoppers need to be educated about this. If open banking continues to make strides, then you’re well-positioned to get a lot of market share. My question has to do with the geos you are operating in. Open banking is making strides in the UK. What are the alternatives to open banking in the States and Europe? Should we even define open banking? A lot of our audiences are not necessarily in the FinTech space, they’re more merchants and operators.

With open banking, what it means is that banks are forced to open their data to enable a third party like us to build new services for online shoppers and merchants. It’s simple. It’s data that was previously not accessible by third parties. Now, with open banking, they are. Solutions like us then come to life and help eCommerce businesses. In your question about the US, the equivalent of open banking in the US for approximation might be ACH and real-time payment.

With the access to data in real-time and ACH payment, is it as generous as open banking in terms of access to payment data?

The interesting trend that we’ve seen is that despite open banking starting in the UK, now it’s not only a standard with PSD in Europe but also Australia is moving in that direction. The Us is looking into joining this global standard of banking API. It will be fantastic to have a standard on a global level. It’s unrealistic but at least having a 2 or 3 standard on a global level would make a massive help in increasing the checkout experience.

The UK is on the cutting edge because this is clever tech. When I’m paying utility bills, I use open banking. I don’t like the checkout experience for most utility providers on payments. Their checkout forms are convoluted. They don’t look secure. Open banking, particularly on mobile, it’s easy to integrate with my bank and it’s instant. It’s a debit from my account. It makes a ton of sense. In terms of adoption with the data you have thus far, how are you converting shoppers towards creating an account? Do you need to create an account with one-click checkout?

We don’t need to create an account. As long as you have your banking app installed on your phone, our solution works. Most of the payment methods out there, Fast, PayPal, etc, are using the eCommerce website enough to get their customer acquisition. It means that you need to create an account with PayPal before using it.

With us, we don’t do that. If you have your banking app installed on your phone, the Volume button shows up. With one click, it opens your favorite banking app to complete the payment. That’s how we move conversion rates. A lot has been said about helping merchants to improve conversion rates. We are taking it to the next level because of the no signup process that is required.

What is the typical call to action for a Volume one-click checkout? I would assume if I was a retailer, speaking to mid-market retailers who follow the show churning over $1 million to $25 million in revenue, a lot of them will see Volume. We’re now looking at subsets of them. The UK-based would see Volume as an add-on to their checkout. They will still have those options because shoppers want those options anyway. If you were to add Volume as one of the payments, how would you describe it? Is it paying with open banking or paying with your banking app? How are retailers framing the use of deploying Volume or encouraging usage of Volume or open banking as a means to make payments?

It’s a completely white-labeled solution. To give you an example, what’s your bank?

Monzo.

You go on a merchant website, you see sunglasses, you’re like, “I need to get ready for the summer.” You have two options, either add-to-cart or pay with Monzo. When you click Pay With Monzo, your banking app comes up. Volume is nowhere. It’s white labeling. That’s how we’re able to move the needle better than anybody.

It’s your payment infrastructure, payment layer.

We call it transparent checkout because it takes the brand of your favorite banking app. For you, it’s Monzo. For me, it’s Revolut. Revolut is my favorite banking app. We are the headless checkout that personalizes the button based on the individual customer. Did I manage to convince you to use us?

This podcast is not in any way geared towards encouraging people to use any apps. I want to know more about open banking and its potential. That’s the reason why we brought you guys on. I’m clever. I’ve left this conversation with much more insights into how you can go about open banking at a checkout that is headless. I want to thank you for coming on to the podcast. For those who want to find out more about Volume, it’s GetVolume.co.uk. At the moment, it’s only open to UK merchants. That may change. Simone, for those who want to follow you, are you active on any social media platforms? How best can they reach out to you?

On our website, there is a chat with us that goes straight into my phone. Feel free to drop any questions.

It’s been interesting getting to learn more about Volume and checkouts. Thank you so much, Simone.

Thank you very much. It’s a pleasure to be here. Thank you for inviting me.

Cheers.