What are Open Banking payments?
- Open Banking payments offer the potential to simplify cross-border transactions
- Most merchants and PSPs require specialized support to realize the full potential
- Third party payment technology vendors like Trustly offer the solution
Open Banking payments, also referred to as online banking payments or online banking e-payments (OBePs), offer consumers the fast and convenient option to pay directly from their bank account without a debit or credit card.
The “open” part of Open Banking involves allowing third party fintech businesses to securely access bank account information, such as via application programming interfaces (APIs) .
An API is a technical specification that sets rules for how software components interact, allowing systems of different companies to efficiently work together. Today, third-party fintechs and payment providers are able to connect securely with the customer’s online banking portal to proceed with a payment through APIs or secure modified customer interfaces (MCIs).
Leveraging APIs or MCIs, third party vendors can add innovative software, applications and services on top of a bank’s platform. That includes Open Banking payments services, which were originally designed specifically for online payments, but which today are also finding their way into the physical world.