Total Processing > Blog > Payments > What are the benefits of open banking?

What are the benefits of open banking?

What are the benefits of open banking?


Faye Duncan


06 Nov 2023

Read time

4 Minutes



Open banking is the latest development in the financial world and is set to be a game-changer, offering a host of advantages to both merchants and customers alike.

With this new approach, financial institutions can now utilise the data they have stored (with the customer’s consent) to drive innovation and help solve real-life financial problems for businesses and individuals.

Before we delve into the advantages of open banking, if you want more of an overview, then you can check out our ‘What is open banking?’ blog.

Open banking benefits for Merchants

First, let’s take a look at how open banking can benefit you, the merchant, and how it’s tackling the key pain points that can often arise.

1.     Lower transaction costs

Traditional payment methods, especially credit card transactions, can come with high processing fees. Open banking transactions typically have lower associated costs, making it an attractive option for businesses.

2.     Enhanced security

Open banking prioritises security, offering advanced authentication and encryption measures. Merchants benefit from reduced fraud risks, resulting in a more secure and reliable payment ecosystem.

3.     No chargebacks

On top of the added security, as a merchant, you’ll be thrilled to discover this benefit; there are no chargebacks within open banking. Chargebacks are one of the biggest pain points within a business and can be costly, so it’s significantly beneficial for merchants that customers cannot claim chargebacks when using account-to-account (A2A) payments.

4.     Access to rich customer data

Open banking allows merchants to access detailed customer transaction data with their consent. This information provides valuable insights into customer behavior, enabling businesses to tailor their products and services more effectively.

5.     Faster settlements

In traditional payment systems, it can take days for funds to reach a merchant’s account. Open banking accelerates this process, allowing for quicker access to funds. These real-time payments are a significant benefit for businesses, improving cash flow management. Its popularity is shown by how quickly it’s been adopted with 195 billion transactions in 2022.

Open banking benefits for customers

Now, let’s see what the benefits of open banking are to your customers and how this new development can offer them a smoother experience, encouraging loyalty and trust.

1. Simplified account management

Customers often have accounts with multiple banks and financial institutions, making it challenging to keep track of their finances. Open banking consolidates all these accounts into one easy-to-use interface, simplifying account management and saving time.

2. Smart budgeting and financial insights

Open banking apps and tools help customers budget and save more effectively. By automatically categorising spending and offering financial insights, customers can gain better control of their finances and make informed decisions.

Loan approved notification

3. Secure and convenient transactions

Customers benefit from the convenience of A2A transactions, powered by open banking, by enjoying secure, one-click payments. The fact that a customer’s information can only be shared with their consent, combined with the use of biometric authentication methods, like fingerprint or facial recognition, transactions are both secure and effortless.

4. Access to better financial products

Open banking enables customers to easily compare various financial products, such as loans, savings accounts and credit cards. This empowers individuals to find the best deals and make financially sound decisions.

5. Inclusive access to credit

Open banking is available to anyone with a bank account, making it an inclusive approach for all users to gain access to credit. Its holistic approach to credit assessment considers more than just traditional credit scores. This inclusive method allows a broader range of customers to access credit, helping those who might have been previously excluded.

The risks of open banking

Like any financial approach, despite its extensive list of benefits, open banking does not come without its challenges; trust being the biggest one. With any new development, it can take time for consumers to get on board, particularly the older generation. Consenting to have their financial information shared can raise risk concerns, so as a merchant, it can be a challenge to put them at ease and advise them of its security.

Other challenges for both merchants and consumers that shouldn’t be overlooked include:

  • Data privacy: Customers share their financial data with third parties, posing data privacy concerns, so should only be shared with reputable institutions and businesses.
  • Regulatory compliance: Compliance with open banking regulations is complex, requiring significant resources to stay up to date.
  • Customer confusion: The multitude of third-party apps may confuse some customers, potentially leading to errors.
  • Technology dependence: The reliance on digital infrastructure means there’s a potential for disruptions due to technical glitches.
  • Debt concerns: While it expands credit access, there’s a risk of increased debt levels; so caution is advised.

In embracing open banking, it’s crucial to be aware of the risks as well as the benefits. As a merchant, ensure you are up to date on the latest regulations and developments within this latest approach to payments to make sure both your business and your customers remain financially secure.

In conclusion, open banking is a win-win for both merchants and customers. It streamlines payment processes for businesses, offering cost savings and enhanced security. Simultaneously, it simplifies the financial lives of individuals, providing them with greater control over their money and investments and access to a wider range of financial services. Open banking is indeed an innovation that benefits all sides of the financial equation, making transactions smoother, safer and more efficient for everyone involved.

Are you ready to upgrade your payment solutions with open banking? Check out how we’ve partnered with to offer you A2A capabilities or get in touch with one of our specialists to discuss your options.

Ready To Start
Accepting payments?