Open Banking Platforms: A Merchant’s Guide to Smarter Payments

The world of payments is evolving at an unprecedented pace, and merchants must adapt to keep up. Customers now demand smooth, secure, and fast payment options, rendering traditional methods increasingly outdated. This is where open banking steps in – a transformative approach that reshapes how businesses handle payments while enhancing customer experiences.

With a multitude of open banking platforms available, choosing the right one can be overwhelming. This guide explains open banking, its benefits for merchants, and how to select the ideal platform for your business needs in 2025.

What Is Open Banking?

Open banking is a system that grants businesses and customers greater control over financial data and payments. Traditionally, banks kept such information private. With open banking, secure systems called APIs (Application Programming Interfaces) allow banks to share customer account details with approved third parties – but only with the customer’s explicit consent.

This system enables businesses to receive payments directly from customers’ bank accounts without relying on cards or lengthy transfer processes.

Key Features of Open Banking

• Secure Systems: APIs ensure that data is shared safely and securely.

• Customer Consent: Data is shared only with the customer’s permission, ensuring privacy and trust.

• Transparency: Customers can view and control how their data is being used.

Benefits for Merchants

The advantages of open banking for merchants are substantial:

• Faster Transactions: Payments are often processed in real-time, improving cash flow.

• Lower Costs: Compared to traditional card payments, open banking can reduce transaction fees by up to 20%.

• Enhanced Security: Strong customer authentication (SCA) minimizes fraud risks.

• Improved Customer Experience: Simplified checkouts and no need for entering card details enhance user satisfaction.

• Global Reach: Many platforms support multiple currencies, making cross-border transactions seamless.

Fun Fact: As of January 2025, open banking is projected to process $150 billion in global payments annually (Statista).

Why Open Banking Is Essential for Merchants

1. Lower Costs

Open banking eliminates the high fees charged by card networks. According to Merchant Savvy, businesses can save up to 25% on payment processing costs by adopting open banking.

2. Faster Payments

Real-time payment processing accelerates cash flow. A 2024 report by Juniper Research highlights that 70% of businesses using open banking reported improved liquidity.

3. Enhanced Security

Secure APIs and strong customer authentication significantly reduce fraud. According to the European Payments Council, fraud rates with open banking are 45% lower than traditional card transactions.

4. Better Customer Experience

Customers benefit from faster, easier checkouts. A YouGov survey in late 2024 found that 75% of respondents prefer open banking for its convenience and security.

5. Global Compatibility

Leading platforms like Plaid and Tink support transactions in multiple currencies and connect to thousands of banks globally, making international trade more accessible for merchants.

How to Choose the Right Open Banking Platform

When selecting an open banking platform, it’s crucial to evaluate your business needs and match them with the platform’s features. Here’s what to consider.

Check the bank coverage, in order words how many banks the platform connects to and in which countries. The wider the coverage, the more customers you can serve.

Look for platforms that offer more features than just basic payment initiation. Features like recurring payments, payouts, data analysis, and instant settlements can make a big difference for your business.

Some open banking platforms provide analytics tools that give insights into customer behaviour, helping you optimise your offerings and marketing strategies.

Ease of integration is key. Platforms with APIs, plugins for popular e-commerce platforms, and no-code options make setup faster and simpler.

Ensure the platform complies with regulations like PSD2 in Europe and offers strong fraud prevention tools. Security should never be compromised.

The payment flow should be smooth and user-friendly. Look for platforms that prioritise fast and intuitive checkouts.

Consider transaction fees and whether the platform offers flexible pricing based on your transaction volume. Avoid hidden costs that can eat into your margins.

Key Benefits of Open Banking Platforms

Open banking platforms bring a host of benefits to merchants. Here’s what you can expect:

• Fewer Abandoned Carts
  Frictionless payments mean customers are less likely to drop off during checkout.
• No Chargebacks
  Since payments are authorised directly by the customer, there’s no risk of costly chargebacks.
• Improved Cash Flow
  Instant settlements give you faster access to your funds, helping you manage your business more effectively.
• Customer Trust
  The use of bank-level security builds trust with your customers, encouraging repeat business.

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  Success Story: A UK-based online retailer saved 30% on payment costs and increased sales by 20% after switching to open banking in 2024.

Why Open Banking Is the Future of Payments

The shift towards open banking is undeniable. By addressing the limitations of traditional card payments – high fees, slow processing, and fraud risks – open banking offers a modern solution for merchants and customers alike.

Businesses that adopt open banking in 2025 will benefit from:

• Enhanced payment efficiency

• Improved customer experiences

• Reduced operational costs

Conclusion

Open banking is revolutionizing the payments landscape, offering merchants an efficient, secure, and cost-effective alternative to traditional payment methods. By choosing the right platform, businesses can enhance customer trust, reduce costs, and stay ahead in a competitive market.

Embrace open banking in 2025 and unlock a new era of financial innovation for your business.

FAQs

1. What is open banking?

Open banking allows banks to share data securely with approved third parties, enabling faster and easier payments.

2. How does open banking help businesses?

It reduces transaction fees, accelerates payments, and enhances security.

3. Is open banking safe?

Yes, it uses secure APIs and customer authentication to prevent fraud.

4. Are there any downsides to open banking?

Challenges include initial setup costs and educating customers about its benefits.

5. Which regions lead in open banking adoption?

Europe and the UK are at the forefront due to robust regulations like PSD2.