Open Banking Payments: How They Work and What They Cost

Open banking payments let customers pay a business directly from their bank account, approving each payment in their Bank app instead of entering card details. Businesses pay their provider a fee per transaction, with no card interchange or scheme fees. With Atoa, Pay by Bank starts from 0.7% + VAT.

Look closely at a card statement and the fees are rarely simple: a headline rate, then interchange, scheme fees and the odd surcharge on top. So when businesses hear that open banking payments are “cheaper,” the fair question is: cheaper by how much, and where’s the catch? This guide explains how open banking payments work, what they cost, the pricing models providers use, the fees to check and how they compare with cards.

What Are Open Banking Payments?

Open banking payments, also called Pay by Bank or account-to-account (A2A) payments, let a customer pay a business straight from their bank account. Instead of entering card details, they approve the payment in their own Bank app with Face ID, fingerprint or a passcode, and the money moves over the UK’s Faster Payments network in seconds. The payment is started by a payment initiation service provider authorised by the FCA, and it never passes through the Visa or Mastercard networks. UK use is growing quickly. More than 40 million open banking payments were made in June 2026, and the total since launch has passed one billion, according to Open Banking Limited. Our open banking adoption insights cover the wider UK picture.

That skip past the card networks is the whole cost story. Card payments carry interchange and scheme fees set by Visa and Mastercard. Open banking has neither, which is why the economics look so different.

How much do open banking payments cost?

For your customers, open banking payments are completely free. Under the UK’s open banking framework, overseen by the Financial Conduct Authority (FCA) they can approve a payment or share bank data at no charge, so there’s never a surcharge when they use Pay by Bank at checkout.

For your business, they aren’t free, but they are low-cost. You pay your provider a small fee per transaction to cover the bank connections, compliance, fraud checks and settlement they run for you. Because there’s no interchange or scheme mark-up to pass on, that fee sits far below card costs. With Atoa, Pay by Bank starts from 0.7% + VAT, compared with Atoa card payments from 1.3%. Online payments add 20p for both.

What Pricing Models Do Open Banking Providers Use?

Providers price it in a few ways, and knowing which you’re on makes quotes easy to compare:

• Percentage per transaction: a set percentage of each payment, sometimes with a small fixed amount added. The most common and most predictable as volumes grow.
• Per successful payment: you’re charged only when a payment completes, so failed or abandoned attempts cost nothing.
• Flat fee per transaction: a fixed pence amount whatever the payment size, which can suit high-value baskets.
• Tiered or monthly plans: a monthly platform fee blended with a lower per-transaction rate, aimed at higher-volume merchants.

There’s no single right model. A business taking many small payments usually wants a low percentage, while one taking a few large invoices may prefer a flat fee or a cap. Our comparison of open banking payment providers works through both cases using each provider’s published prices, and Atoa’s rates and plans are on its pricing page.

What Hidden Fees Should You Check?

The headline rate is rarely the full picture. Before you sign, check for:

• Setup or integration fees to connect your website, till or accounting tool.
• Monthly minimums or platform charges that apply even in a quiet month.
• Failed-payment or refund fees.
• Contracts, lock-ins or notice periods.

Open Banking vs Card Payment Fees

Atoa’s open banking payments vs card payments comparison covers the wider differences, from checkout to refunds.

Even after the provider’s fee, open banking usually costs less than cards because there’s no interchange or scheme fee to pass on. Whether Pay by Bank is cheaper than cards for your business depends on your average transaction value and the pricing model you’re on.

How Much Do Recurring Open Banking Payments Cost?

For subscriptions, memberships or regular invoices, open banking also underpins Variable Recurring Payments (VRP): a mandate the customer approves once, then you collect against it. It works as an alternative to card-on-file and Direct Debit. VRP pricing varies by provider and use case, so ask for it separately from one-off Pay by Bank rates.

Are Open Banking Payments Worth It for Businesses?

A small per-transaction fee still buys a lot:

• Lower costs than cards, with no interchange, scheme fees or card-scheme chargebacks.
• Faster settlement, with payments typically confirmed within seconds over Faster Payments.
• Stronger security, because every payment is approved inside the customer’s own Bank app and no card details are shared.
• Simpler reconciliation, with payments matched automatically to invoices in tools like Xero and QuickBooks.

With Atoa, these sit alongside partial payments, payment links and accounting integrations, so the fee saving is only part of the value.

The Takeaway

Open banking payments are free for your customers and low-cost for your business. The real value isn’t that they’re “free,” but that they’re fair: transparent, predictable pricing with no card-network mark-up, settlement in seconds and no chargebacks. It’s a big part of the future of payments in an open banking world and, for most UK businesses, a materially lower cost of getting paid.

FAQ

How much do open banking payments cost?

They’re free for customers and low-cost for businesses. With no interchange or scheme fees, providers charge a small percentage or flat fee per transaction with Atoa, Pay by Bank starts from 0.7% + VAT.

Are open banking payments cheaper than cards?

Yes. Skipping the card networks removes interchange and scheme fees, so Atoa’s Pay by Bank starts from 0.7% + VAT — up to 50% lower than typical card fees.

Do open banking payments have scheme fees?

No. Open banking is account-to-account, so there are no card interchange or scheme fees a big reason it costs less than cards.

Are open banking payments free for customers?

Yes. Customers are never charged to approve an open banking payment or to share bank data under the UK’s open banking framework.

Sources

• Open Banking Limited — what open banking is and how payments are regulated: Open Banking
• Financial Conduct Authority — open banking and payment services regulation: FCA
• UK Faster Payments (Pay.UK) — the rails behind account-to-account settlement: Pay.UK