Open banking: what it is and why it's changing how your customers pay
No card, no number to type: the customer pays directly from their account, in a few seconds.
For decades, paying online has almost always meant one thing: entering card details. Open banking is changing that habit, enabling direct account-to-account payments, with no card network involved. It's not a passing trend: it's an infrastructural shift with concrete implications for costs and the customer experience.
What open banking really is
It's the system, enabled by the European PSD2 regulation, that lets authorised third-party providers access a customer's bank account data and payment functionality, with their explicit consent.
In practice, this means a customer can authorise a payment directly from their current account to yours, without entering any credit card details.
How an account-to-account payment works
At checkout, the customer selects their bank from a list, is briefly redirected to their bank's app or site to authorise the payment, and returns to your site with the transaction confirmed.
The whole process takes a few extra seconds compared to a card payment, but eliminates the need to type in card numbers or security codes.
Why it's worth it for you as a merchant too
Account-to-account payments bypass the card networks (Visa, Mastercard), which apply interbank fees on every transaction: the result is often lower fees for the merchant.
Chargeback risk is generally lower than with cards, because the payment is authorised directly by the account holder through their own bank, with an already very strong level of authentication.
The limits worth knowing
Customer adoption is still lower than that of credit and debit cards, simply out of habit: offer it as an additional option, not an immediate replacement.
Not all participating banks offer the same user experience in their own authorisation process: some interfaces are smoother than others, a factor you don't directly control.
- Open banking enables direct account-to-account payments, with no card network involved.
- Fees are often lower than card payments, since interchange fees are avoided.
- Chargeback risk is generally lower for this payment method.
- Customer adoption is still growing: offer it as an additional option, not the sole method.
- Completely replacing card payments with open banking, without considering customer habits.
- Not explaining to the customer what to expect during the brief redirect to their bank.
- Ignoring this payment method thinking it's reserved only for big tech companies.
Frequently asked questions
Yes, it's often considered safer: authorisation happens directly through the customer's own banking app or site, with the same security level used for online banking.
Yes, PSD2 regulation requires all European banks to make technical access available, though the user experience can vary from bank to bank.
They generally take a few extra seconds for the redirect to the customer's bank, but fund settlement can be just as fast, and in some cases faster than cards.
Offer account-to-account payments too
Daevon integrates open banking into your checkout, with lower fees than traditional card payments.
