Open banking providers explained: What to look out for

Open banking adoption is on the rise and you may be considering different providers to help you offer open banking capabilities to your customers. And you’re not alone, 93% of businesses surveyed by Mastercard believe that the momentum of open banking will continue to grow over the next five years. 

Once implemented, businesses are quickly seeing the value. 25% of merchants say open banking payments are already one of their most important payment methods, particularly in industries like construction and financial services.

There are a lot of different payment providers in the market and it’s a varied landscape. In this article, we look at the key things you should look for and the different types of providers on the market. 

Important criteria for an open banking provider

Breadth of payment options 

Open banking has come a long way since its inception in 2018 but adoption has not gone mainstream quite yet. Some sectors are adopting faster than others. Significant developments such as commercial Variable Recurring Payments, that will expand open banking use cases, are yet to be fully realised. 

Whilst open banking is still developing, you need to make sure you’re providing back up payment options where open banking might not work for a particular use case. Ideally this would be within one integrated payment flow so you don’t have to build in-house payment flows or disrupt the customers journey. 

Optimised checkout conversion 

We partnered with YouGov to understand the influence payments have on the buying journey and found that 67% of payers will stop a purchase if their preferred payment method isn’t available. Respondents listed security, ease of use and money leaving their account in a timely manner as top things they look for when choosing a payment method. 

Clearly customers value their checkout experience. When looking for an open banking provider, you need to understand what capability they have to enhance the customer experience using payment data and trends they have seen through their platform. 

By recognising a payer from a previous transaction, details can automatically be filled out creating a seamless experience for the customer. GoCardless, for example, has a 78%+ likelihood that we have seen a customer’s bank account before. Open banking only providers would have limited payer data after only being in operation since open banking was first introduced in 2018. 

Platform reliability 

Platform reliability goes beyond just API uptime or volume of payments collected. These are important but you need to get a full picture of their reliability, including ability to resolve issues as they arise. 

These include: 

Coverage and connectivity - do they offer connections with the banks your customers actually use? A wider network of banking connections means you can access the necessary data and accounts of your customers. 

Processing capability - how many payments can the provider handle and does this match your needs? A payment provider that’s only been in operation for a few years may not be able to handle large scale, complex payment collections. 

API uptime and reliability - do they have a strong API uptime? A strong API uptime means you’re not likely to get unexpected outages that impact the service you offer your customers. 

In-house payment capabilities - do they own and build their payments infrastructure? If a provider is dependent on third parties that supply their payments infrastructure, they may not be as responsive or capable to solve any issues as they arise. 

Payments experience 

Compared with well established bank payment types such as Direct Debit, open banking has only been around for a relatively short period of time. As open banking develops and new payments technology emerges, choosing a provider with bank payments expertise can help you navigate the evolving landscape with ease.

A provider with a long operating history and a large number of customers will likely have encountered any questions or unique challenges your business may have. They’ll also have strong relationships with the banks and regulators involved with developing open banking. A long operating history also means they have a proven track record of stability to cope with any market fluctuations. 

Open banking providers compared

If you’d like any more support with implementing open banking payments for your business, speak to our payments experts today.