Open Banking Vs Card Payments: Which is Better for Your Business?
Businesses accepting payments today face a key decision: continue relying on traditional card payments with their fees and delays, or adopt Open Banking as a faster, lower-cost alternative.
Both options have their place and benefits, but the differences in cost, speed and risk are driving more businesses to rethink how they get paid.
What’s the Difference Between Open Banking and Card Payments?
Open Banking allows customers to pay directly from their bank account, approving the transaction in their banking app.
Card payments rely on multiple intermediaries — including issuers, schemes and acquirers — to process transactions.
The result:
- Open Banking = direct, bank-to-bank
- Card payments = multi-layered processing
Key Differences That Impact Your Business
Fees and Costs
Card payments involve multiple fees:
- interchange
- scheme fees
- acquiring costs
These often total 2–3% per transaction.
Open Banking typically uses:
- flat fees or low percentage costs
- fewer intermediaries
For high-volume businesses, the difference can be substantial.
Settlement Speed
Card payments:
- typically settle in 1–3 working days
Open Banking:
- uses Faster Payments
- funds often arrive instantly
Faster settlement improves cash flow and reduces reliance on credit.
Fraud and Chargebacks
Card payments — especially remote ones — carry fraud risk.
Chargebacks can:
- reverse transactions
- add fees
- create admin
Open Banking:
- uses Strong Customer Authentication
- requires approval via the customer’s bank
- removes chargebacks from the process
Customer Experience
Card payments require:
- manual entry of card details
- additional verification steps
Open Banking simplifies this:
- customer selects their bank
- approves payment in-app
- no manual data entry
A smoother experience often leads to higher completion rates.
Operational Efficiency
Card-heavy systems create admin:
- reconciliation
- dispute handling
- settlement tracking
Open Banking reduces this through:
- real-time confirmation
- simpler reconciliation
- fewer disputes
Why Businesses Are Adopting Open Banking
Businesses are increasingly adopting Open Banking because it:
- reduces transaction costs
- improves cash flow
- lowers fraud exposure
- simplifies payment processes
For many, it becomes a core part of a modern payment strategy.
When Card Payments Still Make Sense
Card payments still play an important role:
- widely recognised and trusted
- used globally
- preferred for rewards or credit
For this reason, many businesses use both Open Banking and card payments together
Combining Both Payment Methods
A flexible payment strategy allows businesses to:
- offer choice to customers
- optimise costs per transaction
- reduce risk where possible
Using both methods ensures:
- accessibility
- efficiency
- resilience
Real-World Examples
- Retail: reduce fees by encouraging repeat customers to use Open Banking
- Charities: maximise donation value by lowering processing costs
- Utilities: improve payment speed and reduce late payments
- Professional Trade Services: get paid instantly via payment links
Choose the Right Payment Mix for Your Business
Open Banking and card payments each offer advantages. By understanding how they differ, businesses can reduce costs, improve cash flow and create a better payment experience.
