Selling cars isn’t just about the showroom experience anymore—it’s about making the entire buying journey smooth, including payments. Besides, traditional payment methods aren’t exactly built for speed or cost efficiency. Between high transaction fees, slow settlements, and the risk of fraud, dealerships often lose time and money on outdated processes. That’s where open banking steps in. By providing a secure framework, open banking allows car dealerships to leverage its solutions and accept payments directly from customers’ bank accounts. This cuts out costly intermediaries, allowing car dealerships to get paid instantly through secure transactions. The result? Lower fees, improved cash flow, and a better experience for both dealers and customers.
What is open banking and why does it matter to car dealerships?
Open banking gives businesses secure access to financial data and payment services, enabling fast and cost-effective transactions without relying on card networks. As of December 2024, there are over 12 million active users and 223.9 million payments done through open banking.
For car dealerships, this means smoother, more efficient payments that align with modern customer expectations. Ponko, a car dealership in Cambridge, uses Atoa Instant Bank Pay to accept payments directly from customers’ banking apps. This switch has saved them over £6,000 in card fees every month and significantly improved cash flow. Today, 96% of their transactions go through Atoa. Ponko also uses SMS payment links, allowing customers to pay for cars, deposits, and servicing even when they aren’t at the dealership. This has helped them close deals faster and increase revenue.
The problem with traditional payment systems
Car dealerships have relied on traditional payment methods for years, but these systems come with significant drawbacks:
- High processing fees: Card payments involve multiple intermediaries, each taking a cut, which eats into profit margins.
- Settlement delays: Payments often take 2-3 days to clear, or more, delaying access to funds and disrupting cash flow.
- Manual reconciliation: Matching payments to invoices is time-consuming and prone to errors.
- Fraud risks: Traditional payments, especially card transactions, are vulnerable to fraud and chargebacks.
- Limited payment flexibility: High-value transactions often require bank transfers, which can be clunky and inconvenient for customers.
How open banking fixes these issues
Open banking payments help dealerships overcome these common challenges. Here’s how:
- Instant settlements: No more waiting for payments to clear. Dealerships get access to funds immediately, improving cash flow.
- Lower fees: With no card networks involved, open banking payments can cut transaction costs by up to 50%.
- Automated reconciliation: Payments are automatically matched to invoices, reducing admin work and human error.
- Enhanced security: Transactions are authenticated through bank-grade security, minimising fraud risks.
- More convenience for customers: Customers pay directly from their bank app, without needing card details or complicated verification steps.
The benefits of open banking solutions for car dealerships
Beyond just solving payment headaches, open banking solutions allows dealerships the following operational and financial benefits:
- Better cash flow management: Immediate access to funds allows dealerships to reinvest quickly.
- Reduced overhead costs: Less time spent on payment processing means lower staffing and admin costs.
- More time to sell: With smoother payments, sales teams can focus on closing deals instead of chasing payments.
- Improved customer experience: A simple, secure way to pay builds trust and removes friction from the buying process.
Future-proofing payments with open banking
Open banking adoption is growing in the UK, driven by changes in customer behaviour and advancements in payment technology. More businesses are realising that fast, low-cost, and secure payments aren’t just a nice-to-have—they’re essential.
Takeaway
The automotive industry is moving fast, and payment technology needs to keep up. Open banking is giving car dealerships the ability to cut costs, reduce admin work, and improve customer satisfaction—all while future-proofing their business against outdated payment methods. For dealerships looking to sell more cars with fewer payment headaches, now’s the time to explore open banking. Book a demo with Atoa today and see how it can transform your dealership’s payment process.
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