Why New Payment Methods Matter to UK Businesses
Cost reduction. Open banking payments bypass the Visa and Mastercard networks entirely. No interchange fees, no scheme fees. For a business processing £100,000 per month, moving relevant transactions to open banking at 0.2% versus card processing at 1.0% saves £800 per month.
Settlement speed. Faster Payments, the infrastructure behind open banking, settles in seconds. Compared to the one to three business day settlement cycle for card payments, this has real cash flow implications for businesses where payment timing matters.
Customer expectations are changing. A growing proportion of UK consumers, particularly under 40, actively use open banking apps, Pay by Bank options, and digital wallets. Offering these payment methods improves the customer experience for this demographic.
Regulatory momentum. The FCA and the UK's Open Banking Implementation Entity (OBIE) are actively expanding the open banking framework. Variable Recurring Payments (VRP), enhanced dispute mechanisms, and improved international support are in development. Businesses that understand the landscape now will be better placed as it matures.
What Most UK Businesses Should Do Now
Most businesses do not need to overhaul their payment setup to benefit from new payment methods. The immediate high-value actions:
Enable Apple Pay and Google Pay. These are standard digital wallets that process as card transactions, same rate, no new accounts needed. Enabling them in your gateway typically takes under an hour and improves mobile checkout conversion. If you haven't done this, it's the first step.
Add payment links if you invoice remotely. If your business invoices customers or collects payment outside of an in-person or ecommerce context, Pay by Link is simpler and more compliant than phone payments. See our Pay by Link guide.
Consider open banking for high-value B2B transactions. If you regularly invoice other businesses for amounts above £500, open banking payments significantly reduce processing costs. See our What Is Open Banking guide.
Where Open Banking Is Heading
The UK open banking framework is continuing to develop. Key developments that will affect businesses:
Variable Recurring Payments (VRP). VRP allows pre-authorised recurring open banking payments where the amount varies, a merchant-initiated pull that works like a Direct Debit but via Faster Payments. Some major banks now offer VRP commercially. This is particularly relevant for utility-style billing and subscription businesses. As VRP matures, it will close one of the current gaps between Direct Debit and open banking.
Dispute resolution frameworks. The absence of an equivalent to the Direct Debit Guarantee has limited consumer adoption of open banking payments. Regulatory work on dispute resolution mechanisms is ongoing. Improved consumer protection will accelerate B2C adoption.
International expansion. UK Faster Payments is domestic. Open banking cross-border payments infrastructure is developing, particularly for UK-EU corridors, but is not yet at the maturity of domestic open banking.
Embedded finance. Open banking APIs are increasingly being used for more than just payments, including real-time account balance checks, affordability verification, and automated expense categorisation. For businesses in financial services or with lending components, these capabilities have growing commercial relevance.
Practical Next Steps for UK Businesses
If you accept card payments online and process more than £20,000/month: Investigate whether adding open banking as an alternative payment option makes sense for your customer base. The cost saving on even 10% to 20% of transactions routed to open banking is meaningful.
If you invoice B2B customers: Open banking payment links (via providers like Volt or TrueLayer) offer faster settlement and lower fees than card payment links for invoice amounts above £200 to £300.
If you run a subscription or membership business: Assess whether VRP or enhanced open banking recurring payment products suit your model, particularly as the infrastructure matures through 2026 and beyond.
If you currently take payments by phone: Moving to Pay by Link as the primary remote payment method is lower cost, simpler to comply with, and offers better fraud protection regardless of whether the underlying mechanism is card or open banking.
