Barclays to bring digital payments to more merchants in open banking pact

Barclays, in an effort to counter digital fintechs in omnichannel merchant acquiring, is working with BigCommerce to offer multichannel transactions enhanced fraud detection to its nearly 60,000 merchants online and improve fraud detection.

Many large payment companies are shelling out billions of dollars to acquire each other to build bundles to serve card issuance, e-commerce and related merchant services. The pressure is to provide a single source for merchants and banks, either through acquisition, third party integrations or some combination of the two models.

“There are a lot of stores that are already offline and using Barclaycard that want to sell online too,” said Brent Bellm, CEO of Austin-based BigCommerce. “Having the ability to combine that acceptance with an online selling platform is an ideal situation.”

Part of that is open banking, which has grown out of Europe’s PSD2 standards to mandate data sharing between banks and third parties, usually through tools such as application programming interfaces.

PSD2 hardens compliance requirements, requiring Strong Customer Authentication, which is expected to be a tough implementation for both banks and merchants. Many companies are behind in compliance, and most deadlines have been extended to the end of 2020.

That’s made SCA a new battleground among digital merchant acquirers.

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“Payment service providers are offering ‘SCA as a service’ to merchants, enabling merchants to become SCA compliant with a simple API call,” said Ron van Wezel, a senior analyst at Aite Group. “It is definitely a must-have for online merchants since the deadline is Dec. 31.”

The Barclaycard/BigCommerce partnership will support 3D Secure, which enables strong customer authentication and should ease compliance, Bellm said. One possible addition to the partnership is Barclaycard Transact, the institution’s fraud prevention system, which enables businesses to take advantage of the exemptions permitted under SCA. This can help maintain a balance between fraud security and customer experience, said Nicole Olbe, managing director of partnerships at Barclaycard, in an email.

Barclaycard and BigCommerce will add scale to reach merchants while meeting the needs for faster onboarding in a merchant acquiring market where fintechs such as Stripe are offering easier onboarding. Stripe’s partnerships, for example, include Shopify to extend cross-channel sales.

Barclaycard hopes the BigCommerce partnership will serve cross-border transactions, particularly in cases in which the standard payment is not a debit or credit card, Olbe said.

“We can help our merchants by providing them with alternative payment methods through one single integration,” Olbe said, adding some of the methods available are Ideal, Sofort, Giropay, ancontact and Mastercash — which are widely used in Europe. “Ultimately this will mean that Barclaycard is delivering a more appealing payments proposition for e-commerce businesses, which should in turn grow our customer base.”

BigCommerce has made several high-profile partnerships over the past few years that have fueled its diversification. It has drawn investment from Goldman Sachs, and has used a tie-in with Chase to support the bank’s “buy button” for e-commerce. BigCommerce’s collaboration with PayPal provides merchant financing; it's also partnered with Square to power inventory management, and Instagram to support in-app purchases.

Barclaycard has been active in digital payment technology on several fronts that could benefit through faster onboarding and a network effect for merchants.

Barclaycard and Uber's Visa card allows consumers to apply and receive fast approval through Uber's app, using information already on file. PayPal and Barclays have teamed to allow Barclays consumers in the U.S. and U.K. to manage accounts though both parties' apps. Other Barclays deals with Bink and American Express extended incentive marketing through digital channels. And the bank recently centralized its various digital and wearable payment projects in a centralized hub.

“Integration of payment gateways in e-commerce is a big trend,” said van Wezel. “This provides merchants easy access to payment capabilities.”