Open banking
Open banking is the access that licensed third parties get to account data and payment initiation through a bank's API, with the customer's consent.
The customer authorizes a service to read their account data or to send a payment straight from their bank account. The bank exposes a standardized API for this, and the service needs the relevant licence or registration with the regulator.
In the EU, open banking is set out in the PSD2 directive, which introduced account information service providers (AISP) and payment initiation service providers (PISP). Similar regimes exist in the UK, Brazil (Open Finance) and a number of other countries.
For merchants it mainly means pay by bank (A2A): money moves bank to bank without a card network, and the customer confirms the payment in their banking app. Fees are often lower than for cards and there is no classic card chargeback, but refunds are sent as a separate transfer.
Related terms
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