Open Banking

Trustly: What do you need to know about Open Banking in the UK?

Open Banking, as the name would suggest, is a directive designed to ‘open up’ banking data by forcing the UK’s nine biggest banks to release their data in a secure, standardised form so that it can be shared online more easily.

It brings more competition and innovation to financial services, which in turn leads to better products for customers to manage their money.

Sounds simple enough, but what does it really mean in practice? And for those looking at this from the gambling industry perspective – what do you need to know?

Liam Colclough, Business Marketing Manager – Gaming at Trustly, breaks it down for you.

The real story of Open Banking payments in the UK

After years of development, the new and improved British Open Banking APIs have been live now for a few months. These APIs work by securely exposing bank data to third-party payments solution providers, which enables consumers to make payments directly from their bank account using existing funds. 

Though it took some time to get here, the British APIs are some of the best in the world. But that’s not the whole story. The APIs are just the beginning. 

You may have only heard part of the story 

Maybe you have heard that the APIs will allow operators to finally take full advantage of Open Banking payments in the UK. With Open Banking in the cashier, operators will be able to provide the seamless CX that gamers expect while also adhering to the strong customer authentication regulations laid out in PSD2 – or so the story goes. 

While the new British APIs are some of the best on the market, they are an incomplete solution. I’ll follow that up by stating that Open Banking APIs are not designed for businesses and they definitely were not designed for gaming.

So, who am I to make such a bold statement? As part of Trustly’s regulatory dialogues, we have worked with the Open Banking Implementation Entity (OBIE) since it was founded in 2006 by British government with the mission of modernising the APIs. 

We have worked hard to share the “voice of merchants” with OBIE, including data gathering and analysing successful bank payment markets. 

Initiation-only is just the prologue

As good as they are, the Open Banking APIs don’t “just work” – not without an added layer of complexity that few operators can afford to build and manage on their own. 

The APIs simply initiate a payment. Initiation-only and API aggregators deliver the basic level of services, but reconciling individual Open Banking payments is challenging. Payments are not always guaranteed, so merchants risk non-settlement.

To really succeed with Open Banking, operators need a partner like Trustly who can help reduce admin costs, accelerate payment settlements, and expand cross-border reach.

The post vs. courier analogy

Using the initiation-only payment method is like choosing the regular post to deliver a parcel, while Trustly is like using a courier. Both do basically the same thing – but the quality differs. 

If I send a birthday gift to my friend through the regular post, I can be relatively sure it will arrive in a few days, but it’s not guaranteed. There is no way of knowing when it actually arrives or if the package has been left on the doorstep in the rain.

If I use a courier, I’m guaranteed the parcel will be delivered the next day and I’m notified when it arrives. If my friend isn’t home, the package is returned to me with no risk of damage or theft. 

Open Banking APIs are like the post, it might work, but it’s not optimal. At Trustly, we offer a model more like the courier, with an added layer of security and value-adding service. 

What Trustly adds to the story

With our Pay N Play solution, we help operators fill in the blanks left by Open Banking APIs and API aggregators. We leverage the APIs to deliver a complete solution that consists of KYC, ultra-fast payouts, refunds and reconciliation.  

Because Trustly provides much faster settlement than cards, the transaction risk for operators is minimised. In our model, the payment goes to Trustly’s account, not the operator’s, which simplifies cross-border payments and liquidity management. 

With access to our network of 6,000 banks in Europe, North America and Australia, merchants no longer need a bank account in every market, they just need one contract and one activation with Trustly. 

Operators can become heroes in the Open Banking story

As Open Banking payments continue to gain momentum in Britain and throughout the world, offering an online banking payment option in the cashier will be crucial for operators who want to stay relevant with consumers in the UK and beyond.

Open banking has so much promise, but if you need a partner to realise the full benefits, then talk to me and the team at Trustly!

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