kevin. launches first-of-its kind ‘switching’ product to cut card networks out of online payments

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kevin., the Lithuanian payments startup, has launched a first-of-its-kind product that seamlessly switches customers from card payments to account-to-account (A2A) payments during the payment flow via a PSD2-based open API. Customers who start making a payment using their card can finish using their bank account, a method that is up to 90% cheaper for merchants.

Every year, merchants in Europe pay more than €10 billion in fees for online payments made using cards. For each online payment, merchants must pay a gateway fee, a transaction processing fee, and an interchange fee. They must also wait 3 to 5 days before receiving the payment from their acquiring bank.

With the PSD2 directive, banks are now obliged to open API for payment initiation. This new framework allows the process to be more streamlined and affordable, with new tools facilitating A2A payments that cut out the middlemen. However, customers still opt for familiar card payments over new A2A alternatives at present. It is this problem that kevin.’s new product addresses.

Pavel Sokolovas, co-founder and COO of kevin., said: “In Europe, up to 80% of all online payments are made by debit card. And behind every debit card there’s an account, which means these payments could be made directly from accounts. So we built a product that makes it easier and more appealing for customers to switch from card to A2A payments during the payment flow.”

“What’s unique about this new product is that it seamlessly switches the payment method once the customer has chosen to pay by card. At checkout, the customer starts typing their card number. After the first 8 digits we can identify the bank and card type. If it is a debit card, we then give the customer the option to switch to a bank payment, explaining that this is faster, safer and easier. In fact, our method requires at least 2 fewer steps than a typical online card payment, with no need to enter the card holder’s name, the expiry date, or the CVV number. With no card and CVV this flow is much safer for the customers.”

Payments made using kevin. save merchants up to 90% on acquiring fees compared to using a card network. kevin.’s analytics team conducts a switch analysis for each new market, forecasting the percentage of customers likely to switch from card to A2A payments. In this way, merchants can calculate the potential savings they will make.

Tadas Tamošiūnas, co-founder and CEO of kevin., said: “In closed beta testing, customers who had never used our solution before were given the option to switch. More than 10% did so. We are confident that once our product is better known, even more will choose bank over card payments. This means we will be able to save merchants in Europe a significant percentage of the €10 billion they currently spend on fees for card payments every year.”

This is the second time in 2021 that kevin. has brought a first-of-its-kind product to market. In January, the fintech startup introduced the first ever PSD2-based solution for payments from pre-linked accounts. It has further plans to challenge in areas of traditional card network dominance, including POS. kevin. is currently operating in Finland, Sweden, Estonia, Latvia, Lithuania, Poland, Portugal, and the Netherlands, with plans to offer its payment infrastructure to clients in 14 more European markets by 2022.