What is an Open Banking Payment Gateway?
Open Banking refers to a set of financial services solutions, technologies and standards that enable users to safely and securely exchange account information, such as through UK applications and websites.
An Open Banking Payment Gateway is a new payment method for your customers. Consumers pay you through instant bank transfer, which transfers money from their bank account to the business. It is quick and secure, and it requires no cards or data entry.
Merchants gain all of the features anticipated of a modern payment method when they use Vendreo’s Open Banking Payment Gateway service. Our system already includes refunds, recurring payments, installment options, and complete reconciliations.
For example, you can opt to grant a regulated firm secure access to your current account information maintained by your account provider via an app or website. Only you can select what information you share and how long you share it for, and no one can access it unless you grant them permission.
You must have online or mobile banking for your personal or company current account in order to use an Open Banking Payment Gateway service.
Services that enable you to share your account information with companies other than your bank have been available for some time, but they were delivered through a process known as screen scraping. Screen scraping is the process of obtaining on-screen information, similar to taking a snapshot of your data.
Because you don’t have to reveal your password or login credentials to anybody other than your bank or building society, an Open Banking Payment Gateway is more secure.
Why should I divulge my personal information?
Sharing your information enables businesses to provide you with a wide range of services though an Open Banking Payment Gateway. You can, however, control how your information is used and with whom it is shared.
These services may be supplied by firms you recognise, such as high street banks, or by others. Services that may be provided include:
- Account dashboard and aggregation enables you to view accounts from many banks and building societies in a single mobile app or online.
- Spending analysis is categorising transactions and payments across different accounts in order to determine how much you spend on certain items or with specific businesses.
- When shopping for services, for example, if you’re looking for a new energy supplier on a comparison site, your spending patterns will be automatically analysed, and you’ll be able to get the best deals without having to manually enter all of your information.
- Track your financial objectives – for example, if you’re saving for something, you may set a target and track your progress.
- Spending limitations – track how much you spend over time after recurring payments, such as rent and bills, are deducted.
How can I tell whether an Open Banking service is legitimate?
Make sure the app or website you intend to use is FCA-approved and listed on the Open Banking website.
When you sign up for account information services with a firm, the provider should offer you with adequate information to understand the nature of the service and how it will use your data, including if it will share your data with anyone else.
Be cautious before using one of these services, and ensure that any organisations with which you give your information are who they claim to be. You should ensure that you comprehend the service and are satisfied with the person who will provide it to you.
You should not provide permission if you do not understand why you are doing it or who will receive the information. You will be unable to take benefit of the services if you do not grant permission.
What data will Open Banking firms have access to?
Companies should only request authorisation to access the information required to perform the service.
You have the option of granting access to current accounts, flexible savings accounts, e-money accounts, and credit cards.
You can share the following types of information:
Regular payment data, such as who you’re paying, standing orders, and direct debits activities like incoming and outgoing payments from your bank or building society account features and advantages, such as fees, overdraft payments, and rewards
You can also authorise them to make payments from your bank account, including one-time payments.
What is the procedure for sharing my account information?
To use account information services, do the following:
- You will normally need to download an app to your smartphone or log in to the website.
- You will be prompted to enter the data of several bank accounts so that the firm can compile all of the information.
- Businesses that want to access your data must provide you with adequate information to understand how and why your data will be used.
If you grant them access to your bank account details, you will either be:
- Sent to your banking app or online portal to login and confirm your desire to share this information.
- Asked to provide your bank information securely using their own site.
The firm will then be granted access to your data by your bank.
How does an Open Banking Payment Gateway work for online payments and shopping?
For e-commerce payments, customers utilising an Open Banking Payment Gateway begin a payment to a merchant or business via their mobile banking App or online banking web portal, just as they would with a bank transfer. Using real-time banking rails, funds are quickly transmitted to the merchant.
If you utilise this service, certain online businesses like Vendreo may allow you to pay without using a credit card or debit card. When you reach the checkout, you’ll see that you’re taken to your bank’s website to login and grant the store permission to request payment from your bank.
Additional security checks, such as two-factor authentication (2FA), may be required to ensure that you are the one making the transaction.
For example, you may receive a code on your mobile phone that you must input in order to finalise your transaction. You may also be prompted to confirm your phone using your fingerprint or face recognition.
How to Give Permission in a Safe Manner
There are a few things you should take to ensure your safety when utilising any online banking services.
- Check that the Open Banking Payment Gateway provider is on the FCA registration and the Open Banking website.
- Examine your statements, and if you see any strange activity or payments from your account, notify your bank or account provider immediately.
- Make certain you understand how to cancel the authorisation. This information should be available on the company’s website or by phoning them.
It is critical to practise internet safety.
Benefits of an Open Banking Payment Gateway
Open Banking Payment Gateway solutions use the consumer’s own Online Banking App and the inherent biometric security within it, making it one of the safest and most secure payment methods around. Your financial data is safe, fraud is neutralised.
Vendreo OpenPay is simple for consumers and merchants. Friction at the checkout is minimised, meaning greater conversion rates and fewer abandoned carts. Vendreo Pay positively enhances a shopper’s user experience. Vendreo’s API allows developers to integrate solutions into existing websites and online apps seamlessly.
Using an open banking payment gateway, funds are transferred instantly from the consumer’s bank to the merchant’s bank. No waiting for third-party payment services to process.
Vendreo Pay charges zero transaction commissions. Save fortunes over payment gateways like Stripe, PayPal and others.
Read more here about the advantages of Open Banking.