Monday , August 15, 2022

How GoCardless’s Deal for Nordigen Bolsters Its Position in Opening Banking

GoCardless Ltd., a specialist in the burgeoning field of account-to-account transfers, strengthened its hand Friday with the acquisition of Nordigen Solutions, a Latvian-based open-banking platform provider, for an undisclosed sum. The deal will allow GoCardless to connect to more than 2,300 banks in 31 countries to enable account-to-account payments, a technique receiving growing interest from merchants and payment providers seeking alternatives to traditional card-based and automated clearing house-based payments.

The acquisition of Nordigen will allow London-based GoCardless to provide free open-banking connectivity to developers, banks, and merchants at scale, GoCardless says.

“We feel that direct payments are a once-in-a-lifetime trend, and open banking and real-time payments are [two drivers] of this trend,” says Duncan Barrigan, chief product and growth officer for GoCardless. “Like us, Nordigen believes that account data [shared around open banking] is a building block for better financial services, lending, and payments.”  

GoCardless has been accelerating its open-banking strategy the past 18 months with the launch of Instant Bank Pay, which enables merchants to request a payment from a customer and collect the funds directly from the customer’s account in real time once the customer approves the transaction. In addition, GoCardless has launched Verified Mandates, which combines automatic account identification with direct debit to prevent fraud. Now, GoCardless plans to leverage the Nordigen acquisition to add new payment types, such as variable recurring payments, and expand the reach of its direct-payments network.

“When it comes to direct payments, especially debit, merchants need certainty around the existence of the account, the balance in the account, [and so on],” Barrigan says. “Open-banking technology will help drive direct payments for years to come and allow developers to provide better products around the technology.”

Open banking has blossomed into a global phenomenon is recent years and is projected to reach $19.1 billion in transaction volume in 2022, up from $15.1 billion in 2021, according to ResearchAndMarkets.com. By 2026, open-banking transactions will total $48.1 billion, representing a compound annual growth rate of 25.9%, according to the research firm.

“Open banking not only makes account-to-account payments more efficient, it offers the opportunity for a lot of innovation around the technology,” says Nordigen chief executive and co-founder Rolands Mesters.

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