What do most payment professionals get wrong about Open Banking?


To stay competitive, payment professionals need to understand at least the basics about the services provided by Open Banking Payment vendors. Yet many in the payment industry are still unclear on some crucial facts.

How do we know? We asked them.

In 2020, 249 senior payment professionals in Great Britain and the EU took our quiz on the topics of Open Banking and PSD2. Less than 60% answered six or more questions correctly.

The most common mistakes were related to the capabilities of various Open Banking Payment suppliers in Europe and the UK.

So, there are some misconceptions we want to clear up. Here are three things you need to know to support your Open Banking strategy.

SPOILER ALERT: We share some of the answers to our quiz below. If you want to test your knowledge, stop reading here and come back to see how you fared in comparison with your peers.

Take the PSD2 quiz now


1. What does PIS stand for?

Payment Initiation Services is abbreviated as PIS. The providers of those services are called PISPs.

Knowing what these acronyms stand for may not be so important, but understanding what PISPs do, and the differences between them, is crucial for payment professionals to stay ahead of the curve and realize the benfits of Open Banking. 

In Europe, the Second Payments Services Directive (PSD2) requires that all banks allow and support authorized third party PISPs to initiate payments. One effect of this regulation is that Account-to-Account Payments are much more widely available across Europe.

There’s buzz about Account-to-Account bank transfers, also called Online Banking Payments and Open Banking Payments. Whatever you call them, bank transfers are projected to surpass the popularity of card payments in Europe before the end of the decade.

In an effort to stay relevant, some merchants and payment service providers are rushing to implement Open Banking Payments. But decisions made without understanding all the factors could lead to costly missteps.

2. Do all PIS providers offer the same coverage?

Almost 25% of our quiz takers got this question wrong. The correct answer is no, all PISPs do not offer the same coverage.

There are actually big differences in how providers connect to banks, which affects their capabilities, capacity, and coverage. Some PISPs only initiate payments, while other “full-service” PISPs offer a wider range of services.

Without understanding these differences, merchants might choose a PISP that doesn’t actually offer the right services.

Open Banking Payments have the potential to help merchants take control of costs by simplifying fee structures and reducing the number of fee-charging ‘middlemen’ in the payments process.

Without the right PISP partner, merchants risk taking on unnecessary costs, perhaps even more than what they already face with traditional online payments.

Merchants gain some important benefits by working with a full-service PISP, such as the ability to collect cross-border payments, and as we’ll cover below, the ability to offer payouts.

3. Can all PISPs offer refunds?

This is another important question, which almost 40% of our respondents got wrong.

Again, the answer is no. In order to be able to offer refunds, the PSIP must be in the flow of funds –– most initiation-only providers aren't.

To offer refunds, merchants need a payout solution and reconciliation services. Typically, only full-service PISPs can support instant refunds, which is proven to increase customer loyalty.

According to our recent e-commerce survey, 65% of customers said the speed and ease of refund affects where they choose to shop, while 95% said same-day refunds would make them more loyal to a merchant.

In addition to CX, merchants also need to pay attention to cost. The true cost of handling refunds without an automated procedure can be extreme, especially when factors such as administrative labor and the cost related to unhappy customers are added to the equation.

What else do you need to know about Open Banking?

Understanding the differences between PISPs is a crucial part of any Open Banking strategy. But of course, there’s plenty payment professionals need to know.

At Trustly, we’re dedicated to sharing knowledge on many topics related to Open Banking. Please check out our Knowledge Hub for in depth articles and reports, along with other shorter blogs and videos.

Want to know more about Trustly and Open Banking?
Visit our Open Banking Explained article.


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