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What is Open Banking? 

As the name suggests, it has to do with financial services. Fundamentally, open banking uses open APIs to build applications and services around a financial institution. There are two types of online services: AISP and PISP. 


An Account Information Service Provider (AISP) lets you manage your account information and finances from different accounts, all in one place. The technology can analyse your spending, assisting you in budgeting. 

open banking inforgraphic

As this diagram shows, an AISP pulls information from a range of a user’s financial accounts into one place. This simplifies the data for users and gives a clear overview of spending and budgeting.


A Payment Initiation Service Provider (PISP) initiates payments. It lets you pay a company directly from your bank account into their account, removing the need for debit or credit cards through card schemes such as Visa or Mastercard. 

Here you see how a PISP works. The payment transaction passes through the PISP, but not through an acquiring bank or card network. 

Open banking is possible thanks to PSD2, the revised Payment Service Directive issued by the European Commission. The update not only enables access to commercial data previously monopolised by banks but obligates that this data is freely available via an API. This gives the same opportunities wherever you are in the EEA. 


Open Banking Payments 

Open banking is changing the way payments are made, improving the service for merchants and their customers. Payments made using open banking move funds directly from one account to another, without going through a card scheme. This means that: 

  • Funds clear instantly 
  • Fraud is minimised 
  • Merchants save on interchange fees 


What does it mean for customers? 

When purchasing something, customers pay directly from their bank account, not via a credit or debit card. This means payments are instant and removes the threat of fraudulent payments or card theft. 

What does it mean for merchants? 

Merchants get instant settlements, fewer chargebacks, and they save on interchange fees. Open banking not only saves time and hassle, but money too. 

A new committee – the Joint Regulatory Oversight Committee (JROC) – has been announced, tasked with overseeing the rollout of Open Banking in the UK. This will add control and help to further improve the security of transactions for consumers and merchants.