What open banking needs to reach its full potential

‍By Max Collinge, Head of Product at Yaspa

Open banking has transformed payments, offering greater control, efficiency and cost savings for businesses and consumers. But there’s still work to be done to help it reach its full potential. While adoption continues to grow, there remain key areas that, if improved, would make open banking a truly universal, competitive and seamless payments alternative.

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At Yaspa, we see four major areas where open banking could be strengthened to enhance its usability and reliability: better payment delivery, conformity across Europe, greater observability of data, and enhanced fraud prevention. Here’s our wishlist for the future of open banking.

Improving payment delivery and status tracking

One of the most significant issues today is the lack of clarity around when a payment has truly been completed. Banks use ISO status codes such as ACCC (AcceptedCreditSettlementCompleted) which confirms the transaction has been received and cleared, and ACSC (AcceptedSettlementCompleted), which only indicates that the payment has been sent but not necessarily settled. However, many European banks fail to return these codes consistently, making it difficult for businesses to determine the true status of a transaction. Ideally, open banking payments should come with a clear, instant confirmation, standardised across all banks, that the destination account has received funds. This would put them on par with card payments, which offer an immediate guarantee of funds, even if the actual settlement happens later.

Speed is another challenge. While SEPA Instant Credit Transfer (SCT Inst) in Europe is designed to process transactions in under 10 seconds, delays occur between the initiation and actual crediting of funds. Similarly, the UK’s Faster Payments scheme allows for near-instant transactions, but service-level agreements still permit delays (caused by compliance processes, screening tools and infrastructure issues) of up to two hours. A more robust and reliable infrastructure is needed to ensure payments are processed consistently within seconds, making open banking a viable alternative to card payments in retail and other real-time transaction environments, such as ticketing, hospitality, crypto and land-based gambling, and financial trading. Yaspa has first-hand experience in deploying workarounds to ensure open banking delivers on the promise of speed, thus remaining competitive with card payments. For example, we have implemented a cancellation mechanism that kicks in should a payment take longer than 60 seconds. This is outlined in the ‘Supporting the play section’ of our new approach to payment outcomes blog post.

Ensuring payment conformity across Europe

A major roadblock to seamless open banking payments across Europe is the persistence of International Bank Account Number (IBAN) discrimination. Despite regulations, some banks - particularly in France and Spain - continue to block or delay transactions to specific countries based on the IBAN associated with a payment due to fraud concerns. Additionally, the inconsistent implementation of ISO status codes among European banks complicates cross-border transactions.

Greater observability of data

Open banking promises better financial insights, but banks provide inconsistent levels of transactional data. A major improvement would be the introduction of universal transaction identifiers, allowing businesses to accurately track and reconcile payments across different systems.

Another key enhancement would be the integration of AIS (Account Information Services) and PIS (Payment Initiation Services) into a single process. Currently, customers must separately authenticate for each service, adding unnecessary friction. A unified process would streamline the user journey while enabling businesses to perform necessary financial checks before initiating payments.

Additionally, merchant category codes (MCCs) should be attached to all transactions to improve categorisation and compliance monitoring. At present, only some payments carry these codes, limiting their utility in identifying transaction types. Making MCC codes a standard requirement would provide clearer insights into payment behaviour, benefiting industries that require precise categorisation to ensure transitions are transparent, compliant and traceable to safeguard both consumer and merchant, such as iGaming.

Enhancing fraud prevention measures

Fraud prevention remains a challenge in open banking due to limited control over the accounts used for payments. Businesses cannot currently enforce IBAN or account blacklisting or whitelisting, making it harder to prevent payments from flagged accounts. Enabling these controls would significantly improve fraud prevention.

Moreover, banks should provide verified identity details - such as date of birth, email, and mobile number - during AIS calls - for example, a request made by a third-party provider to access a person's financial data (with their consent) for the purposes of account authentication. This would allow businesses to conduct more robust fraud assessments, particularly in industries requiring strict age and identity verification, such as gambling and alcohol sales.

Finally, improved access to transaction details, including IBANs and account numbers, would enable better fraud screening. At present, only a few banks return such information, making it difficult to match transactions with specific accounts and detect suspicious activity.

The role of regulators and industry collaboration

Regulatory bodies, including the UK’s Joint Regulatory Oversight Committee (JROC), are actively addressing open banking’s current challenges. One of the most promising developments is the expansion of Variable Recurring Payments (VRPs), which could establish a government-led framework for banks to standardise commercial VRPs and prevent monopolisation by large payment networks. The industry consultation on VRPs, which closed on 28th February, marks a significant step in this direction. VRPs, powered by open banking, will offer a more flexible alternative to direct debits, stored card payments, and traditional point-of-sale transactions.

However, continued regulatory alignment and industry collaboration will be essential to addressing gaps in payment execution, fraud prevention, and data transparency. Standardisation across Europe, improved fraud controls, and truly instant payments should be top priorities for regulators and financial institutions alike.

Final thoughts

Open banking has come a long way, but to realise its full potential, improvements in payment execution, data transparency, and fraud prevention are essential. At Yaspa, we’re committed to driving these changes, working with industry partners to help shape a more seamless and secure future for open banking payments. We are also championing the standardisation of language related to open banking across the industry to help boost consumer understanding and adoption. Our recent report, The Yaspa Index, revealed that only 55% of consumers were familiar with the term ‘Pay by Bank’, even though it seems to have become the industry’s preferred name for account-to-account payments enabled by open banking.

As the industry continues to evolve, we remain optimistic that open banking can deliver a frictionless experience for businesses and consumers alike. With the right enhancements, it could soon rival - and even surpass - traditional card payments in convenience, security, and efficiency.

Integrating open banking into your business 

Yaspa is at the forefront of the open banking revolution. We offer a wide range of services, including:

• Account verification 
• Account-to-account payments in the UK and Europe
• vIBANs
• Confirmation of Funds 
• And much more…

If you’re interested in learning more about what Yaspa can do for your business, do get in touch. We would love to hear from you.