New research has found that 74% of merchants are planning on adopting open banking standards.

According to a new report from European open banking platform TrueLayer and YouGov, while card use still dominates, more merchants are planning to use open banking technology to offer instant bank transfers.

Open banking emphasises the use of open-source technology and greater transparency and privacy over user data. These standards allow customers greater freedom to manage their money, helping make transfers between different service providers easier.

In practical terms, it means that customers can pay straight from their bank account instead of having to enter their card details when making purchases.

For customers, the report found that 50% of all shoppers use credit and debit cards as their primary payment method online. For items over £200, this rises to 63%.

However, digital wallets, such as PayPal and ApplePay, have also proven popular – 37% of surveyed people said that this is their primary way of paying for goods online. However, the report added that shoppers are less likely to use digital wallets for higher ticket items – only 19% choose wallets for purchases over £200.

For many merchants, using credit and debit cards represent a financial burden. The research found that 49% of merchants rated the high cost of payments, such as processing fees and slow refunds, in their top two payment pains.

Refunds in particular are a concern for merchants. With 81% of shoppers expecting a refund from an online purchase in a week, getting a customer’s money back into their account quickly as important for businesses.

However, around a third of merchants surveyed said that they received frequent complaints about slow or lost refunds.

As such, ensuring refunds are provided quickly helps drive customer loyalty, with 67% of shoppers saying the time taken to receive a refund affects their decision on where to shop.

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According to the report, the increase in card usage has driven a rise in card-not-present fraud. The report cited data from the European Central Bank saying that card-not-present fraud increased by 39% from 2013 to 2018. This accounts for around reaching €1.43 billion, with the UK suffering one of the highest levels of card fraud in Europe.

These concerns about security are having a negative effect on consumer confidence. The report found that 68% of shoppers have refrained from buying something online because of worries about payment security.

In addition, the research suggests that offering multiple payment options is in a business’s best interests – 48% of UK and Ireland shoppers said availability of different payment options makes them more likely to buy from a retailer.

“Traditional bank transfers take shoppers away from the checkout and force them to manually copy over transaction details,” said TrueLayer Chief Product Officer Ossama Soliman.

“Open banking enables instant, native bank transfers which dramatically improve this flow: payments start and finish within the merchant’s app or website and there’s no need to manually key in payment details.”