Open Banking is a system by which banks and regulated financial institutions can access, share, and use customer information, with customer authorisation.

Open Banking has been designed to improve financial services for users and businesses alike, and allows data to be used in exciting and innovative ways. For businesses, this means more efficient tools, increased automation, and improved payment processes through Open Banking payments.

Open Banking payments have the potential to change the landscape of online payments, but what is an Open Banking payment? How do they work? And why are they beneficial?

Keep reading to learn more about Open Banking payments in the UK, or get in touch with the team at

Defining Open Banking Payments in the UK

So, what is an Open Banking payment?

Open Banking payments let customers pay directly from their bank using an account-to-account payment flow. Open Banking Payments are user-friendly, cost-effective for businesses, and very secure.

Open Banking is growing in popularity and becoming more established in the UK market and looks to be continuing this way into the future. For example, as of January 2024, 1 in 7 (13%) digitally active consumers are using open banking, rising to 18% among businesses – the highest ever levels of adoption.

Understanding the Open Banking API

Open Banking works using Application Programming Interfaces (APIs). APIs are the supporting technologies that allow businesses to share their data directly with a bank, and vice versa. This includes data like bank details, available funds, variable charges, and more.

The Open Banking API facilitates secure and efficient transactions by directly connecting software, reducing the number of “middlemen” involved in a transaction. This also speeds up transactions and settlement times and reduces payment costs and risks for businesses.

It’s easy for businesses and customers to feel hesitant about Open Banking – the principle of allowing banks to share sensitive customer data can sound alarming on the surface. However, stringent regulations and legislation surround Open Banking APIs.

Open Banking in the UK is regulated by the FCA, under the legislation of the Payment Services Directive (PSD2). Within this legislation, customers have the right to ask third parties to make payments on their behalf and to access their financial data. This puts control back on individual customers rather than banks and financial organisations, so consumer data remains safe and secure.

Advantages of Open Banking

Open Banking has a range of benefits for both businesses and consumers, making it a great option if you’re looking to expand your payment method offering and optimise business operations and customer experience.

Benefits for Businesses

Some of the advantages of offering open banking payments for businesses include:

  • Cost-effectiveness – with no intermediaries managing the payment, there are no additional processing fees or commissions to be paid to third parties with Open Banking payments.
  • Enhanced security – Open Banking payments move directly from the customer’s account to the business, so there are no additional steps where the consumer’s details could be at risk. There is also no need to store credit card information, which can pose a security risk for businesses.
  • Compliance – by streamlining the movement of funds to travel just between bank accounts, compliance becomes simpler to maintain. Open Banking uses bank-level security and all businesses that can use Open Banking have to be FCA or equivalent regulated. Using a platform like gives businesses access to a proprietary Open Banking solution which is fully compliant.
  • Dedicated settlement accounts – by leveraging’s dedicated settlement accounts for Pay by Bank, merchants can offer instant refunds and payouts to customers, allowing them to access their money instantly and offering an incentive for them to spend again in-store. Dedicated settlement accounts also facilitate auto-reconciliation for merchants, allowing funds to be batch settled, resulting in more streamlined business operations.
  • Better approval rates – With an average 97% authorisation success rate, Open Banking transactions demonstrate a remarkable level of reliability and efficiency.

Benefits for Customers

Customers can enjoy a more streamlined payment experience when using Open Banking. Not only do they not need to enter card details, but the funds will also move almost instantly.

Offering more choices to customers in the payment process also results in higher customer satisfaction and fewer abandoned payments.

Implementation and Adoption of Open Banking Payments

The implementation of Open Banking payments into your payment flows can be made simple with

We take a consultative approach to all of our clients, which means that the setup and implementation of our services are entirely bespoke to you and your needs.

While the adoption of Open Banking payments is increasing significantly, it is still a fairly new payment method for customers. This is why we offer our proprietary Open Banking solution, Pay by Bank, in our Hosted Checkout alongside more traditional payment methods, like Apple Pay, Google Pay and card payments. This offers businesses an innovative solution to future-proof their business, while still offering their customers the choice they are used to.

To gain more from the benefits of Open Banking, businesses need to do what they can to drive customer adoption of Pay by Bank. You could consider offering rewards, gifts, or savings to help incentivise your customers to try the new payment method and over time become the default choice as they build familiarity with the payment method and its benefits.

Future Trends and Developments

Open Banking is continuing to grow and evolve, with new technology enhancements and use cases appearing all the time.

Some of the most exciting developments in Open Banking are Variable Recurring Payments (VRPs) and Link Payments, which you can read more about in’s expert guides.

Open Banking and Pay by Bank with

At, our Pay by Bank solution gives our customers access to the power of Open Banking. Our Hosted Checkout solution also offers a way for businesses to offer Open Banking in one simple, slick integration.

To find out more about Open Banking and how it can help your business reduce costs, improve your user experience, and stay ahead of the curve, get in touch with the expert team at