What it is
Open Banking Payments use secure bank APIs so a customer can pay directly from their own bank account, often called pay by bank. Instead of typing card details, the shopper authenticates in their banking app and the money is sent through the UK's payment rails. The standards and ecosystem are overseen by Open Banking Limited.
- Bank-to-bank payment using open banking APIs
- Often branded as pay by bank
- Built on UK Faster Payments and related rails
Where it is mainly used
Open Banking Payments are a United Kingdom capability used by consumers and businesses for online checkout, bill payment, account funding and, increasingly, recurring payments through Variable Recurring Payments. Adoption has grown quickly as more banks and fintechs support it.
- United Kingdom
- Ecommerce checkout, bills, account top-ups
- Emerging use for recurring Variable Recurring Payments
How your customer pays at checkout
At checkout the shopper selects pay by bank, chooses their bank, and is redirected to their banking app to approve the payment. Because the bank confirms the payer, the merchant gets a confirmed and irrevocable transfer. The shopper is then returned to your site with confirmation.
- Select pay by bank at checkout
- Authorise in their own banking app
- Returned to your site with real-time confirmation
How merchants access it
Merchants access Open Banking Payments through a regulated provider or PSP that holds the necessary credentials and connects to banks via the Open Banking Directory. You do not build direct bank connections yourself in the normal case. Choose a provider that supports the banks your customers use and offers refunds and reconciliation.
- Use a regulated open-banking-enabled PSP
- Provider connects via the Open Banking Directory
- Look for refund and reconciliation support
Pricing and settlement
Open Banking Payments are usually cheaper than cards because there is no card scheme fee, but providers charge their own transaction or platform fees. Settlement speed depends on the underlying rail and your provider's payout schedule. Published pricing figures you see online are for initial screening only. Confirm the provider's official pricing page or obtain a written quote before you go live, because pricing models differ widely.
- Typically lower than card fees
- Provider sets transaction or platform pricing
- Settlement depends on rail and payout schedule
Public contact route
Open Banking Limited sets the standards and runs the Directory. For general enquiries about the ecosystem, use the official contact page. Commercial onboarding is handled by authorised providers, not directly by Open Banking Limited.
- Official site: https://www.openbanking.org.uk/
- Standards: https://standards.openbanking.org.uk
- Contact page: https://www.openbanking.org.uk/contact-us
Questions merchants ask
Is open banking payment the same as Faster Payments?
They are related but different. Open Banking Payments is the customer-facing method that uses bank APIs; the actual money often moves over Faster Payments. Think of open banking as the smart checkout and Faster Payments as one of the rails beneath it.
Do I need a UK entity to accept it?
Not necessarily. Many open-banking providers serve international merchants and can settle to your home account. You do need a provider that supports the banks your UK customers use.
Are open banking payments irrevocable?
In most cases the payer-authorised transfer is final, which reduces dispute risk versus cards. Refunds are handled by sending money back, so keep a clear refund process.
What does it cost?
Providers usually charge less than cards but set their own fees. Published figures are for initial screening only; confirm the provider's official pricing page or a written quote before you go live.
How fast do I get the money?
The payer side is often near instant, but your available balance depends on your provider's payout schedule and any risk holding. Confirm the payout timing in writing.
Can I take recurring payments with open banking?
Yes, through Variable Recurring Payments, which let a customer approve a recurring mandate. Support and rules vary by provider and bank, so check coverage before promising subscriptions.