How Open Banking is Transforming Unified Payment Gateways
How Open Banking is Transforming Unified Payment Gateways
The Role of Open Banking in a Unified Payment Gateway
In today’s fast-evolving digital economy, businesses are continuously seeking ways to streamline operations, reduce transaction costs, and enhance customer experience. One of the most impactful innovations shaping the payment industry is open banking. By integrating open banking into a unified payment gateway, businesses can consolidate all payment processing into a single platform, enabling seamless account-to-account (A2A) payments, direct bank transactions, and real-time financial insights.
This article explores how open banking is enhancing unified payment gateways, leveraging Payment Initiation Services (PIS) and Account Information Services (AIS) to optimise transactions and revolutionise business efficiency.
What is a Unified Payment Gateway and How Does Open Banking Fit In?
A unified payment gateway is a single platform that centralises multiple payment methods—credit/debit cards, bank transfers, digital wallets, and open banking transactions—into one streamlined system. Open banking enhances this by enabling direct account-to-account payments and real-time financial insights without reliance on traditional card networks.
By integrating PIS and AIS, businesses gain a cost-effective, efficient, and secure alternative to legacy payment methods, reducing fees, improving transaction speeds, and offering a frictionless customer experience.
Why Open Banking is the Future of Unified Payment Gateways
- Lower Transaction Costs and Increased Profit Margins
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- Traditional card-based transactions involve high processing fees from banks, card networks, and payment processors.
- Open banking eliminates intermediaries, reducing transaction fees by up to 90% compared to traditional card payments.
- Direct account-to-account (A2A) payments offer a cost-effective alternative, improving business profitability.
- Real-Time Transactions and Instant Settlements
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- Unlike card payments that take 2–3 days to process, open banking enables instant fund transfers.
- This improves cash flow, reduces financial bottlenecks, and ensures businesses receive payments without delay.
- Enhanced Security and Fraud Prevention
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- Open banking transactions are protected by bank-level security and strong customer authentication (SCA).
- Unlike card payments, which are prone to fraud and chargebacks, direct bank payments are more secure.
- Businesses can eliminate chargebacks, reducing the risk of fraudulent disputes and financial losses.
- A Frictionless Customer Experience Across All Channels
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- A unified payment gateway powered by open banking ensures a seamless checkout experience.
- Customers can make payments directly from their bank accounts with biometric authentication (fingerprint or face ID).
- No need to enter card details, improving checkout speed and reducing cart abandonment.
- Smarter Financial Insights with AIS (Account Information Services)
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- AIS enables businesses to access real-time financial data (with customer consent).
- Businesses can assess customer affordability, track financial trends, and offer personalised payment solutions.
- Automated reconciliation and real-time tracking reduce administrative overhead.
- Flexible Payment Methods for Every Customer
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- Open banking within a unified payment gateway allows businesses to offer diverse payment options.
- New customers can use BNPL platforms like Klarna or PayPal for flexible payments.
- Returning customers can be encouraged to use cheaper A2A transactions, direct debits, or standing orders, optimising cost efficiency.
How Businesses Can Leverage Open Banking for Growth
E-commerce & Retail
- Offer direct bank payments to cut processing fees and improve checkout conversion rates.
- Reduce dependency on card networks, lowering transaction costs and boosting margins.
Subscription-Based Services
- Automate recurring payments with open banking, reducing payment failures and improving customer retention.
- Leverage real-time financial insights to offer personalised subscription plans.
Financial Services & Lending
- Use AIS to conduct instant affordability assessments before approving credit agreements.
- Minimise lending risks by analysing real-time financial data instead of outdated credit reports.
Multi-Channel Retail & Marketplaces
- Unify bank transfers, card payments, and digital wallets under one platform.
- Ensure seamless cross-channel payment experiences, whether online, in-store, or via mobile apps.
Choosing the Right Open Banking-Powered Unified Payment Gateway
When selecting a unified payment gateway that incorporates open banking, consider:
✔ Regulatory Compliance – Ensure the provider is regulated by the Financial Conduct Authority (FCA) or relevant governing body.
✔ Seamless API Integration – The gateway should integrate smoothly with existing systems (e.g., CRM, accounting software, e-commerce platforms).
✔ Multi-Bank Connectivity – Wide banking network coverage ensures accessibility for all customers.
✔ Advanced Security Features – Strong authentication, encryption, and fraud prevention tools.
✔ Transparent Pricing – Compare transaction fees and hidden costs to ensure affordability.
✔ Reliable Customer Support – A robust support system is crucial for resolving issues quickly.
By integrating Payment Initiation Services (PIS) and Account Information Services (AIS), businesses can:
✅ Reduce transaction costs by bypassing traditional card networks.
✅ Improve cash flow with instant bank transfers and real-time settlements.
✅ Enhance security with strong authentication, reducing fraud and chargebacks.
✅ Offer seamless payment experiences across online, in-store, and mobile platforms.
✅ Gain real-time financial insights to make smarter business decisions.
As businesses continue to embrace digital transformation, integrating open banking into a unified payment gateway is no longer optional—it’s essential for staying competitive in an increasingly cashless economy.
