Open banking payments are gaining ground in regulated online gambling markets, yet many operators still treat them as a vague future concept rather than a practical cashier option available today. This explainer breaks down exactly what open banking is, how a payment flows through it, and what the technology means for your platform, your compliance team, and your players.
What Open Banking Actually Means
Open banking is a regulatory and technical framework that requires banks to share customer account data with authorised third parties, provided the account holder gives consent. In the European Union and the United Kingdom, this framework is mandated by law: the EU's revised Payment Services Directive (PSD2) and the UK's Open Banking Implementation Entity (OBIE) standards both require participating banks to expose standardised application programming interfaces (APIs). Those APIs let licensed payment initiators read account balances and, critically, push a payment instruction directly from a player's bank account to a merchant without a card network sitting in between.
The key actors in any open banking transaction are: the account holder (your player), the account-servicing payment service provider (the player's bank), and the third-party provider (the open banking payment processor your platform connects to). The third party holds its own regulatory licence, typically a Payment Initiation Service Provider (PISP) authorisation.
How a Deposit Flows Step by Step
Understanding the mechanics helps operators configure their cashier correctly and brief their customer support teams.
- Player selects open banking at checkout. The cashier presents the option alongside cards and e-wallets.
- The PISP redirects the player to their bank. This can be a browser redirect or an embedded app handoff, depending on the bank and the processor.
- The player authenticates. Strong Customer Authentication (SCA), usually biometrics or a one-time code, is completed inside the bank's own environment.
- The payment instruction is sent. The PISP sends a credit transfer instruction directly to the bank. The bank executes it in real time over domestic instant payment rails such as Faster Payments in the UK or SEPA Instant in the eurozone.
- Funds arrive and the player's balance updates. Settlement to the operator's account typically completes within seconds, though some banks batch overnight.
Withdrawals follow a similar but reversed path using Variable Recurring Payments (VRP) or standard credit transfers, depending on the jurisdiction and the processor's capabilities.
Why This Matters for iGaming Operators
Several properties of open banking make it particularly relevant to gambling platforms.
No Chargebacks
Because the payment is a bank-initiated credit transfer rather than a card authorisation, there is no chargeback mechanism. Disputes must be resolved through the bank's own processes, which are slower and rarer. For operators managing high card dispute rates, this is a meaningful operational improvement.
Built-in Identity and Affordability Data
When a player authenticates, the PISP can, with separate consent, retrieve account information such as name, sort code, account number, and transaction history. This data supports Know Your Customer (KYC) verification and, increasingly, affordability checks that regulators in markets like the UK are beginning to require. The player's name returned by the bank can be matched against the registration data, reducing synthetic identity risk.
Frictionless for Mobile Players
The redirect to a banking app and back is a familiar flow for most smartphone users. Completion rates on mobile tend to be competitive with card payments when the integration is well implemented.
Compliance Considerations Operators Should Not Overlook
Open banking does not remove AML obligations. Funds still need to be source-verified at appropriate thresholds, and transaction monitoring rules must cover bank transfer deposits just as they cover card and e-wallet activity. Some operators mistakenly assume that because a bank authenticated the player, the compliance work is done. It is not. Your MLRO still needs to apply risk-based procedures, and your transaction monitoring system needs to be configured to ingest open banking payment events.
Additionally, operators should confirm that their chosen PISP holds the correct licence in each jurisdiction where they accept players. A PISP authorised in the UK does not automatically carry passporting rights into all EU member states post-Brexit.
Choosing a Processor: What to Ask
- Which banks and markets are covered, and what is the fallback when a bank's API is unavailable?
- Does the processor support account information retrieval alongside payment initiation, and is affordability data available in your target markets?
- What are the settlement timelines and does the processor offer any guarantee against shortfalls?
- How does the processor handle refunds and withdrawals, and what is the player experience for those flows?
Open banking is not a single product. It is an infrastructure layer. The quality of your integration and the coverage of your processor determine whether players experience it as seamless or frustrating.
For operators evaluating their cashier strategy, open banking deserves a clear-eyed assessment rather than either dismissal or uncritical enthusiasm. The technology is mature enough to deploy today in the UK and in several eurozone markets, and the compliance alignment with affordability and KYC requirements makes it more than just another payment method.
