Open Banking and SEPA payments: how they work together at checkout

Open Banking in Europe was established under PSD2 and is evolving from a regulatory requirement into something much bigger.

It is reported that Europe now accounts for 31.30% of the global Open Banking market. Meanwhile, the EU has around 64 million Open Banking users, and Europe represents 46% of global API offerings.

What does it mean to merchants specifically? If you’ve been running an online business in Europe for any length of time, you already know how frustrating card payments can be, and so do your customers.

The fees that chip away at every transaction, and then more fees. A chargeback can land after you’ve already shipped the order. The settlement may take days to show up in your account, even though the customer paid on Monday.

Account-to-Account payments powered by Open Banking and SEPA (or other systems, depending on currency) can allow you to bypass card networks entirely.

This article explains how Open Banking and SEPA payments combination works, how Open Banking checkout really benefits you as a merchant, and its impact on customers.

What is Open Banking in e-commerce?

Open Banking is a regulatory and technological framework that allows third-party providers to securely access banking data and initiate payments on behalf of customers – with their consent.

In simple words, it is a way to enable account-to-account payments and data access through secure bank connectivity.

In Europe, it became a legal reality through PSD2, the Second Payment Services Directive, which came into force in 2018. Under PSD2, banks are required to provide secure access to payment accounts, typically through APIs.

A key role here is played by a Payment Initiation Service Provider (PISP) – a provider that can initiate a payment directly from a customer’s bank account on their behalf, without ever involving a card.

It is now a regulated payment service in Europe, and providers offering it need the appropriate authorization to provide A2A payment services.

For e-commerce, this has significant implications. Instead of asking a customer to use their card details, an Open Banking checkout simply redirects them to their bank or banking app. They approve the payment there. The money moves directly to you. No card number, no network, and no card scheme are involved in the payment flow.

Understanding SEPA Credit Transfers (SCT) and SEPA Instant (SCT Inst)

Open Banking tools initiate the payment. But the funds still need a road to travel on – and in Europe, that road is SEPA if you go with the euro. Great Britain, for example, has an equivalent – Faster Payments for pounds.

The Single Euro Payments Area covers 41 European countries and creates a unified system for euro bank transfers. Whether you’re paying a supplier in Berlin or receiving funds from a customer in Lisbon, SEPA is what makes that transaction work the same way, every time.

There are two main SEPA transfer types worth knowing:

Standard SEPA Credit Transfers – typically settle within one business day. Solid and reliable – the main advantages are cost-effectiveness and broad reach. However, in the case of a SEPA Instant failure, the payment would not automatically revert to a SEPA Credit Transfer.

SEPA Instant – is where things get exciting. Funds arrive in under 10 seconds, any time of day, including weekends and public holidays. The EU moved to cement this in March 2024, passing the Instant Payments Regulation, which requires euro area PSPs to receive instant payments from 9 January 2025 and, in most cases, to send them from 9 October 2025.

The market is already responding: by the first quarter of 2024, SEPA instant payments accounted for 17.34% of all SEPA Credit Transfers by volume, up from 14.38% the year before. According to the latest ECB / Eurosystem update, that figure later reached 33.7%.

That number is only going one direction. But as we mentioned before, if something went wrong, the transaction would be processed as a standard SEPA Credit Transfer.

How Open Banking and SEPA work together at the checkout

Here’s how a transaction happens when done via Open Banking:

Step 1: The customer selects “Pay by Bank.” At checkout, instead of reaching for their card, the customer picks a bank transfer option. This kicks off the Open Banking flow.

Step 2: Authentication happens inside their banking app. The customer is typically redirected or deep-linked to their own bank – either the app on their phone or the web portal. They confirm the payment using biometrics (Face ID, fingerprint), a PIN, or a one-time code. Crucially, this all happens within the customer’s own trusted banking environment. The merchant never sees credentials. There’s no unfamiliar form to fill in.

Step 3: SEPA moves the money. Once the customer approves, the Open Banking API instructs their bank to fire off the transfer. If the payment is initiated as SEPA Instant and supported by the banks involved, the merchant can receive the funds within seconds. If not, a standard SEPA Credit Transfer will usually credit the beneficiary PSP within one business day.

Open Banking handles the authentication. SEPA handles the movement of money. One without the other is incomplete. Together, they create a checkout flow that’s fast, secure, and genuinely frictionless.

Why should merchants combine Open Banking and SEPA?

For euro e-commerce, there are few practical alternatives: Open Banking payments typically rely on bank transfer rails, and in Europe, that usually means SEPA for euro transactions.

The benefits:

No card-scheme chargebacks. With A2A payments, the customer’s own bank authenticates the transaction. There’s no dispute mechanism equivalent to a card chargeback. Friendly fraud – where a customer claims they didn’t make a purchase they clearly did – simply doesn’t have the same foothold.

That does not mean there are no refunds, recalls, or unauthorized payment claims, but the card chargeback model does not apply in the same way.

For any merchant who’s dealt with chargeback fees, the time spent disputing cases, or the lost inventory that doesn’t come back, this alone is worth paying attention to.

Lower processing fees. SEPA Credit Transfers and SEPA instant payments don’t go through card networks, so there are no interchange fees or scheme fees.

The cost of processing a bank transfer is generally lower, and at volume, that gap compounds quickly.

Instant cash flow. With SEPA Instant, settlement is measured in seconds, not business days. That matters more than it might sound. Better cash flow means less reliance on credit facilities, more agile purchasing decisions, and a business that moves at its actual pace rather than waiting on a bank batch cycle.

Fewer abandoned carts. Biometric authentication is fast and familiar. No 16-digit card number to type on a phone screen, no CVV to hunt for, and no card details to enter at checkout. Removing that friction at the final step of checkout has a real impact on conversion – particularly on mobile, where card entry is at its most painful.

Accept instant bank payments with Genome

Knowing how the technology works is the first step. Actually accessing it as a merchant means working with a payment provider that operates in the European market.

Located in Lithuania, we provide services to clients in Germany, France, Poland, Italy, and many other countries.

Our services are designed around payment infrastructure, giving businesses the ability to accept instant bank payments directly via Open Banking, without routing everything through legacy card networks.

Genome supports both SEPA Instant and standard SEPA Credit Transfers, which matters in practice. Not every bank your customers use will support SEPA Instant yet – but with both rails available, you’re covered either way.

Customers pay smoothly, and you receive funds reliably. Not only that, but we are soon to introduce card payment processing. This feature will allow you to accept payment from clients all over the world if they use Mastercard and Visa cards.

Conclusion

The European payment market is moving toward sovereignty and unification – more customers, more payments, sales will be invoiced in euros, and payments will be made via SEPA.

The economic reasons strongly favor A2A payments: lower fees, no chargebacks, instant settlement, and higher checkout conversion rates.

The shift is already happening – the question is whether your checkout is set up to take advantage of it.

Ready to make the move? Open a business account with Genome and start accepting instant bank payments across Europe with our SEPA instant payments. Our merchant services make it faster, cheaper, and built for the way modern commerce works.