Open banking has transformed the financial services business by bringing a completely new approach to handling finances. Customers have more control over their data with open banking. It gives access to a new generation of financial products. Open banking payment solutions also transform traditional offline banks into feature-rich service platforms.
Regulators introduced the notion of Open Banking to foster innovation while also increasing competition in the financial services market. The procedures, which have already been implemented in the United Kingdom, will become necessary throughout the EU later, as outlined in the most recent Payments Services Directive.
Third-party accessibility to a bank’s account details or the ability to initiate a transaction from a bank is possible with open banking. These operations clearly cannot be carried out at will, thus the third-party providers must be licensed. And the individual who is a bank customer must approve.
In today’s article, we’ll go over the basics of open banking as well as five popular open banking solutions.
How does Open Banking Works?
Open banking enables third-party payment service providers as well as other financial service providers access to their clients’ banks’ personal and financial data. However, consumers must approve the exchange of information, which would be commonly done through an online permission form after agreeing to the terms and conditions.
TPP can then use available APIs to gain access to the appropriate shared information. These APIs can handle transactions from one bank to another without the time-consuming processes that consumers have had to undergo previously. APIs can also analyze a client’s transaction records to find relevant items and services that enhance the customer experience.
Financial Industry’s Impact on Open Banking
The global epidemic has only boosted open banking’s acceptance. The idea is rapidly spreading to more and more nations around the world, increasing competition in the fintech business.
According to Statista, the number of open banking users globally is predicted to increase by about 50% on an annual basis between 2020 and 2024, with Europe accounting for the highest share.
Approximately 45 percent of survey respondents claimed that they have already begun changing their traditional business models into digital ecosystems. And 29 percent stated that open banking is part of their bank’s innovation strategy.
Top 5 Open Banking Payment Solutions
Nuapay
Nuapay is an Irish open banking leader whose goal is to make managing online payments easier. It is the most widely use platform for making Account-to-Account payments. Nuapay connects its customers with thousands of banks in 34+ countries to provide seamless integration settlement services.
Nuapay provides partners all over Europe and the world with a fully integrated digital money transfer solution that eliminates all traditional banking inefficiencies. And unnecessary costs, saving you time, money, and resources at every turn.
Using Nuapay’s open banking contactless payment solutions merchants may obtain all of the benefits of a modern payment method. Such as refunds, recurring payments, installment plans, full reconciliations, and so on.
In addition, the payment environment has won industry honors such as “Best Online Payments Solution–Merchant in 2020” and “Best Use of Open Banking in the Merchant Payments Ecosystem in 2021”.
Klarna
Klarna is a fintech firm based in Sweden that offers online banking services such as transactions for online stores, direct payments, and post-purchase payments. It’s a top-rated online payment provider.
It is best known as “buy now, pay later” software, allowing customers to finance retail items with no interest over a series of installments. It has over 200,000 retail partners, including household names such as Samsung, Nike, ASOS, H&M, IKEA, and AliExpress.
One of Klarna’s many features is its open banking platform. It offers the most scalable and proven mobile banking solution. Businesses can use the Klarna APIs to build financial solutions ranging from expense-splitting applications to Robo advisers.
Furthermore, PSD2-licensed third-party providers can request and receive bank data using Klarna’s white-label service. However, they will almost always need to employ a programming team to incorporate the Klarna API into their service.
Crezco
Crezco provides a digital payment solution that allows you to make payments at a lower cost and with greater convenience. While card payments are convenient, the recipient pays a considerable portion of the sale to the card issuers. Crezco offers direct bank transfers as simple as paying with a credit card, and without the fees.
Since there are no processing fees, Crezco sounds like a dream come true. It’s an open banking payment solution that offers UK businesses a quick, safe, and cost-effective alternative to traditional card payment methods.
Crezco not only simplifies online payments but also provides safe and contactless bank transfers. Users can simply scan a QR code and confirm their payment. All major UK and European banks partner with Crezco.
Banked
Banked is an open banking platform based in London that allows account-to-account payments at checkout. Consumers, businesses, and banks can use Banked to make real-time payments, which improves customer experience, payment security, company efficiency, and cost-effectiveness.
It enables retailers to provide a direct payment option that eliminates the need to input credit card information. Customers only need to complete the verification process before proceeding with payment.
Banked is perfect for small businesses where large payment processing fees might hurt their bottom line, as it only charges 0.1 percent instead of the standard 1-4 percent.
Bud
Bud is a startup base in the United Kingdom that was found in 2015 as an educational platform aim at improving people’s financial well-being. it is now a platform that global banks utilize to leverage the power of open banking and improve their customers’ lives. It’s offers a variety of goods for both consumers and companies.
Users, for example, can manage all of their bank accounts in one place while also analyzing their carbon footprint and creating a purpose-driven, long-term impact. Furthermore, Bud’s data intelligence skills assist consumers in identifying their expenditure on subscription items like Netflix. And allowing them to manage their subscriptions from within their primary banking apps.
Bottom Line
Open banking is changing the payment industry and connecting more banks and fintech companies to the platform. Open Banking is becoming a global trend and future of the payment industry. It increases competition and speeds up the development of new goods and services.
