Open banking enables authorized third-party services to access specified financial data or initiate payments under a legal and technical framework. A pay-by-bank checkout may let a customer authorize a transfer from a bank account without entering card details.

How it works

The customer chooses a bank, authenticates through the bank or approved flow, reviews the payment details, and authorizes the transfer. The payment provider communicates with the relevant bank or payment system. The precise flow, coverage, and timing depend on country, bank, provider, and payment rail.

Fees and cost

Consumers may pay no separate checkout fee in some products, but this is not universal. Merchants may pay initiation, platform, or processing charges. Other costs can arise from currency conversion, payout services, refunds, or reconciliation tools. Always review the applicable price schedule.

Benefits and limitations

Potential benefits include direct account funding, reduced need to enter card details, and payment confirmation through supported bank rails. Limitations may include incomplete bank coverage, authentication friction, transfer limits, and differences in refund or dispute processes compared with card payments.

Security and consent

Use the bank-selection and authorization flow provided by a trusted service. Check the payee, amount, and permissions before approving. Never share online banking passwords directly with an unfamiliar party. Understand what data is accessed, why it is needed, and how consent can be revoked.

For merchants

Assess bank coverage, authorization success rates, settlement timing, refunds, recurring-payment support, customer support, and the provider's fee model. Compare the complete cost with cards and other local methods using your own transaction mix.

Bottom line

Open banking is a framework, not one universal payment method. Availability, consumer protection, and fees depend on local rules and the providers involved.

Sources and further reading

• UK Payment Systems Regulator: Ways of paying
• European Commission: Single Euro Payments Area (SEPA)

UnifyPay provides general educational information, not financial or legal advice.