How does an Open Banking payment flow work, in general?

 

  • Shopper selects Open Banking payment method in the checkout
  • Payment vendor authenticates the shopper and validates funds in real time
  • Merchant receives funds instantly or nearly instantly

 

To understand how this works, we will use the example of purchasing an item from an online shop, though the concept applies to buying any services or transferring funds online. Rather than choosing to pay by card or invoice, the shopper selects an Open Banking payment method in the merchant’s checkout.

Via the API for this particular shopper’s bank, an Open Banking payment vendor is able to authenticate the shopper in real time and initiate the payment. Since the shopper is paying from their bank account, the payment vendor validates that the funds are available and the payment is made to the merchant instantly.

FAQ: Cross-border payments and Open Banking

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Why are online cross-border purchases increasing in the EU?

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What makes online cross-border payments so complicated?

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What are Open Banking payments?

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How does an Open Banking payment flow work, in general?

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Do European banks have to facilitate Open Banking payments?

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How does SCA work with Open Banking payments?

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How do Open Banking payments work across borders?

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How can cross-border expansion be simplified for merchants?

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Are Open Banking payments popular with consumers?

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Why do consumers like Open Banking payments?

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How can Open Banking payments speed up cross-border settlement?

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How do cross-border Open Banking refunds work?

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How can you choose the right Open Banking payments provider?

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