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Open Banking at the heart of digital transformation of payments

Offering the right payment methods and outstanding user experience can give merchants a competitive edge. Consumers no longer want to use cash. They are constantly using their smart devices to pay for goods online and expect their payments services provider to help them save more, spend less, and generally be smarter with their money. The same applies for businesses.

Open payment use cases

Open payment use cases enable companies to boost their payment experiences, not only in ecommerce, but also in other online environments, as they replace legacy payment methods such as bank transfers and checks. Open Banking ePayments (OBeP) are now one of the fastest-growing payment methods in EMEA, where they are set to overtake both credit and debit cards in popularity by 2023, according to Trustly.

Companies with an online presence that only accept debit payments such as bank transfers, debit card payments, and checks, can use open payments to improve the reconciliation of receivables, as the payment reference is automatically included. For industries with high fees (e.g. travel industry, airlines, luxury goods), open payments enable high-value purchases (no risk), eliminate chargebacks, and reduce cost. One promising use case for open payments in financial segments such as money transfer or credit card repayments is to combine Payment Initiation Services (PIS) with Account Information Services (AIS) to obtain a real-time credit score on a customer and provide instant loans at the POS (POS finance).

Replacing cards

Many industry experts agree that cards do not apply for ecommerce use; they were invented for use at in-store point-of-sales and they are not built according to mobile-first, real-time, seamless payment experience. They do not have full geographical presence, incur many fees/surcharges, are not based on instant payment rails, and are more prone to fraud.

As such, online merchants have a growing interest in adding open payments as a new payment method to their checkout page, as open payments can offer several advantages over cards. One of them is reducing the cost of acceptance, which is important particularly for large merchants. Card payments are priced at a fee that includes acquirer margin, interchange fee, and card scheme fees.

When compared with cards, Open Banking payments have full geographical coverage and they are much more secure. Another benefit of Open Banking payments is that they should be able to use the instant payments rails. If the funds can be instantly moved, or at least validated via the Payment Initiation Service Providers (PISPs), merchants can fulfil orders faster and with more confidence, therefore supporting a better overall buying experience.

Furthermore, merchants still must contend with the problem of card fraud, an issue that is diminished by open payments. As they are irrevocable and provide payment finality, open payments have an advantage over genuine transactions that are disputed by cardholders (‘friendly fraud’). Plus, they reduce the risk of critical data, such as credit cards, being stolen. Still, because many Payment Initiation Service Providers (PISPs) rely on batch processing, merchants cannot be sure that the payment will clear. This may cause great concerns for merchants, making OBeP riskier for them to accept. When a direct bank payment is initiated, it is critical for the merchant to receive an immediate notification from their payment provider, so they know that the payment has arrived. This is particularly important for digital goods merchants who need to fulfil orders (such as music downloads and games) instantly.

Request to pay

Besides open payments, another valuable payment method that builds upon Open Banking principles to facilitate more direct and frictionless payments is the Request to pay (RtP). RtP is an umbrella term for several scenarios in which a payee takes the initiative to request a specific payment from the payer.

For SMEs and their customers, Request to Pay service (RTP4) offers a way to interact over payments. For banks and PSPs, it gives a low risk, attractive service for their business customers, whilst obtaining insights into working capital needs and thus generating fee-based lending/invoicing income.

Also, it can free up real business time; even if there is a lot of new great technology, people running a business do not prefer to go ‘app hopping’ after or during a busy working day, as BankiFi mentions in The Paypers’ Global Open Banking Report 2020. They would rather make an invoice in the banking or payments app they are used to, send it by Whatsapp or email – whichever tool preferred by the company or the client – securely, get notifications when the client has received the invoice, and pay by ‘click’ or on a time schedule. Reminders are issued and dashboards give instant insight.


As the industry adjusts to the evolving payments landscape, open payment solutions are rapidly being put into practice. Open Banking is just the first step towards fully digital payments, as it still has some way to go to reach its full potential, which is to make ecommerce truly simple for both consumers and merchants alike. Let’s conclude now with Ciaran O’Malley, Head of Commercial Strategy from Trustly, remark that ‘there is also room, over time, for a global payments network, built on Open Banking, which can start to replace cards more broadly and give both consumers and merchants a better, more efficient payments experience’. Like this story? To learn more about inspiring Open Banking use cases and the recipe behind their success, download The Paypers’ Global Open Banking Report 2020.

About Mirela Ciobanu

Mirela Ciobanu is a Senior Editor at The Paypers and has been actively involved in drafting industry reports, carrying out interviews, and writing about innovation in payments and fintech. She is passionate about finding the latest news on AI, crypto, blockchain, DeFi and she is an active advocate of the need to keep our online data/presence protected. Mirela has a bachelor’s degree in English language and holds a master’s degree in Marketing. She can be reached at or via LinkedIn.

Find out more about The Paypers here.

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