Why open banking is the new retail standard in Europe

Open banking has officially graduated from a regulatory experiment to a core part of Europe’s payments infrastructure. Driven by shifting regulatory landscapes and growing consumer adoption, particularly in the UK and Nordics, instant account-to-account (A2A) commerce is the new baseline. For forward-thinking merchants and payment service providers (PSPs), localised “Pay by Bank” options are now a fundamental requirement for cross-border e-commerce conversion.

The velocity of this volume is undeniable: the global open banking market is projected to reach $190 billion by 2034, with 3 out of 4 European consumers expected to actively use A2A payments by 2029. To win in this landscape, platforms must move past simple point-of-sale payment initiation and leverage the full spectrum of open banking capabilities to drive down costs and eliminate operational friction.

The front-end opportunity: Biometrics and multi-market reach

At the checkout, open banking replaces traditional manual card/IBAN entry with a secure, two-tap experience. By utilising Payment Initiation Services (PIS), consumers authenticate transactions instantly using device-native biometrics, like face ID or fingerprint verification, directly inside their own banking apps.

This brings a revolution in speed and convenience while giving shoppers the power of choice. With strong bank coverage, consumers can pay from their preferred account, providing businesses with more ways to convert. To capture this volume at scale, PPRO provides direct reach to 1500+ financial institutions across Europe – allowing merchants and PSPs to expand smoothly through a single integration.

Performance breakdown: Open banking vs. regular SEPA

While standard SEPA Credit Transfers are sufficient for traditional B2B back-office invoicing, they are too slow and rigid for modern digital retail. SEPA Instant, supercharged by open banking, creates a vastly superior payment rail.

Core merchant benefits: Cost efficiency and fraud protection

Integrating an optimised instant payment framework directly impacts profitability and risk mitigation, letting businesses keep more of the profits from every sale. 

• Zero chargebacks: A2A transfers are “pushed” by the customer from their banking app, making them final and irrevocable. This eliminates the administrative burden and revenue loss of “friendly fraud”.
• Enforced cost efficiency: Under the EU’s Instant Payments Regulation, banks cannot charge premium fees for instant transfers over regular SEPA. PPRO enables merchants to benefit from this cost structure, bypassing expensive percentage-based card interchange fees in favour of flat-fee pricing.
• Strong security: Every transaction is fortified by mandatory Strong Customer Authentication (SCA) via biometrics and passkeys, keeping businesses aligned with European safety standards.
• Retention-driving refunds: Returns directly impact customer retention. Faster refunds put money back in customers’ pockets quickly, building the kind of trust that brings them back to buy again.

Reducing friction across the recurring payment lifecycle

Open banking is expanding far beyond simple point-of-sale transfers. For recurring retail payments and subscription models, manual entry errors and failed mandates traditionally create crippling operational drag for platforms and businesses.

An enhanced account validation framework directly addresses this friction. By layering upfront balance and account checks onto regular Direct Debit payments, this setup acts as a vital pre-flight check before a recurring cycle begins:

• Eliminating human error: Instantly verifies the buyer’s authenticity and validates their IBAN before a recurring Direct Debit mandate is authorised.
• Slashing administrative reversals: Natively mitigates payment failures and accidentally misdirected transfers on high-ticket subscription retail items.
• Stopping free-trial abuse: Validates account balance and ownership upfront to stop identity spoofing and fraud.