Open Banking APIs: Definition, Challenges, and Benefits for Merchants

Post Image

Since the introduction of PSD2, the payment sector has undergone a genuine technological revolution, highlighted by the advent of Open Banking and dedicated programs known as Open Banking APIs (API for Application Programming Interface).

These programming interfaces have unlocked the monopoly of traditional banks in managing customer data and have impacted how you, as merchants, can interact with various players in the banking sector and your customers.

Beyond being a purely technological revolution in the IT sense, utilizing Open Banking and its APIs presents an opportunity for you to grow your business, enhance your consumers’ experience, and improve your company’s operational efficiency, all while leveraging what some call the ‘black gold’ of data.

Are you looking to understand the challenges and benefits associated with APIs, and more broadly, Open Banking?

In this article, we will explore together what Open Banking APIs are, how they can impact your business, and how you can leverage data-sharing services to meet your company’s key challenges.

You’re probably wondering what lies behind all these terms, “API”, “Open Banking”, “data”.

Let’s start by defining what Open Banking is and how APIs play a crucial role in sharing banking data.

Open Banking: The Gateway to APIs

First thing to understand: Open Banking and APIs go hand in hand.

Let’s begin with Open Banking.

It refers to the technology related to the sharing of a banking sector enterprise’s financial data with a third party.

This technology emerged in 2018, the same year as PSD2, and has increased competition, particularly in the payments sector, by forcing traditional banks to open their information systems and share their data with new entrants (often called fintech).

Next, when we talk about APIs, it refers to the method used for transmitting and sharing these financial data through a programming tool.

Note that APIs are computing programming tools used for several years, but APIs related to Open Banking are more standardized with specific norms that promote interoperability, transaction security, and compliance with regulatory standards like PSD2.

Thus, traditional banks have all been compelled to open their financial data to new entrants via dedicated applications and services using Open Banking technology.

There are various types of APIs, but let’s quickly review the most widespread ones related to Open Banking.

What are the main Open Banking APIs used in the market?

The first APIs born from Open Banking, and thus the most developed currently, are the following:

  • APIs offering Account Information Services (AIS)
    • These applications allow access to client data related to their bank account, including:
    • Account ownership information,
    • Account typology,
    • Data on various transactions.
    • This status has been notably used by new players (Fintechs, among others) who offer products around bank account aggregation.
  • APIs providing Payment Initiation Services (PIS)
    • These programming applications are a real boon for you merchants: no need to perform all the payment initiation operations (and the subsequent reconciliations in case of failure or rejection) by yourselves via your traditional bank; dedicated players like SlimPay can handle it for you! A way to gain efficiency and productivity in your daily operations.

Who can use these APIs?

Regarding API usage, a specific status is required, and today, two statuses are favored, relative to the APIs that actors use:

  • Account Information Service Providers (AISP)

    These third-party companies, often new players, can retrieve banking data via dedicated applications and thus exploit them to enhance existing products by offering innovative services and products.
  • Payment Initiation Service Providers (PISP)

    These are establishments authorized to initiate payments (transfers and direct debits, for example) by accessing client data through their original financial institutions.

Whether they are AISPs or PISPs, it’s important to note that the use of their services and products is closely tied to obtaining client consent: the client must give their agreement on both sides for the data to be exchanged.

Nowadays, these two APIs are seen as being essential and are used by the majority of actors in the payment value chain, whether they are traditional banks or Payment Service Providers.

→ For you, merchants, this means that if you conduct your payment operations via a third-party platform like SlimPay, you have the assurance that this platform respects regulations and will probably save you considerable costs.

In the end, Open Banking and APIs: What benefits for merchants?

For merchants, using a solution that already employs the principle of Open Banking combined with APIs has several interests:

Increase Your Conversion Rate

By using an Open Banking-based payment solution, you offer your clients an optimized experience: they won’t have to enter all their banking details, which is often the stage where they abandon their payment journey most.

Instead, they will be redirected to their bank’s parent application for validation, information recording, and consent collection.

Thus, by offering a smooth, simple, and optimized client experience across all digital channels, you will be able to increase the conversion rate and reduce abandonment during the payment process, which is often seen as tedious.

Reduce Costs and Increase Operational Efficiency

Previously, processing payment operations often required the presence of several intermediary actors, whether companies, your employees, or traditional banks.

With Open Banking, you have the possibility to automate a number of your banking processes, which can lead to significant savings.

Two examples to make this more tangible for you:

  • By limiting the risk of manual errors, you can focus on higher-value operations for your company, all through simple applications.
  • By automating all processes related to the management of rejections or unpaid items, no need to have a dedicated resource to manually reconcile operations.

Increase Transaction Security

As previously mentioned, APIs linked to Open Banking adhere to structured and specific data exchange nomenclatures to ensure compliance with regulatory norms.

Thus, by going through a third-party actor that uses an API for payment initiation, your payments can be quickly received from account to account with the assurance that your operations are secured, even without going through a traditional bank.

Once all this is said, you’re probably wondering how to best take advantage of these developments around Open Banking and its applications.

How to Best Use Open Banking APIs to Meet Your Challenges?

The best option to enjoy the advantages related to APIs and Open Banking is to go through a Payment Service Provider that uses this technology and these applications – like SlimPay 😀.

Indeed, these actors now have the ability to simplify your life without going through banks, which often offer higher costs.

This will also allow you to benefit from the best services to manage your company and improve its financial management.

→ Imagine that your goal is to simplify your bank debit payment process.

Currently, you might have already implemented a payment solution on your digital channels without using Open Banking, but did you know that with this technology, you can now delegate this entire scope?

Indeed, several solutions exist today to allow you to access clients’ financial data by initiating payments and then follow the completion of payments and reconciliation in case of failure.

In terms of results, this aims to improve your clients’ satisfaction, significantly increase the conversion rate, and reduce abandonments.

It’s worth noting that the majority of solutions offered in the market that implement Open Banking allow services that can evolve with the growth of your company.


Open Banking and its APIs are a real boon as they are the genesis of a significant transformation in the payment ecosystem.

→ This is an opportunity for you, merchants, to completely rethink the way you manage, among other things, your recurring payments by turning to new, more agile players than traditional banks.

By using solutions based on APIs tailored to your needs and challenges, you can reap the benefits of Open Banking to optimize operational costs by using services and products at the forefront of digital innovation.

APIs and Open Banking are thus not only a strong technological innovation, but for you, they also present a great opportunity to differentiate yourself in the market by simplifying your payment processes.