10 questions and 10 answers on open banking in eCommerce

Use cases and benefits of open banking solutions for the eCommerce industry

Online retail is a highly competitive industry in which the main focus is on conversions, risk minimization and lean, fully digital processes. Open Banking opens up completely new possibilities for online retail that go far beyond simple payments. In this article, we provide answers to the most important questions about Open Banking and, of course, the benefits for merchants and their customers.

1. What is “open banking”?

Open banking describes the opening of a banking interface for third-party providers, such as fintechs, in order to access certain account information or to initiate payments on behalf of the account holder. Open banking is used particularly frequently in financial management tools, but can also be used to check creditworthiness or verify identities, for online payments in eCommerce and other sectors.

finAPI is licensed by BaFin as an account information and payment initiation service and has the necessary permission to provide such services. In addition, finAPI has a TÜV certificate, which confirms that it handles customer data securely and in compliance with data protection regulations.

2. Which payment methods are possible via finAPI with Open Banking?

Payments by bank transfer and direct debit are frequently used payment methods in online retail that can be processed via finAPI.

A bank transfer is made via a secure finAPI web form. The customer logs into his online banking with his personal login details and initiates the payment. The amount is usually credited directly to the merchant’s account within one working day. Scheduled transfers or standing orders are also possible.

Real-time transfers, or instant payments, are even faster. As the name suggests, the transfer is made in real time and the money is received within a few seconds. finAPI supports real-time transfers in principle – but the prerequisite is that both the customer’s bank and the merchant’s bank offer instant payments.

3. What advantages do online retailers and their customers have from making transfers via Open Banking?

One advantage is that all information for the transfer, such as account number, amount and reference, is transferred, eliminating input errors and manual reworking in accounting. The bank transfer can not only be used in the check-out, but also as a convenient payment link or QR code used in invoices.

In addition, there are relatively low costs for bank transfers compared to most other payment methods. The direct transaction costs are surprisingly low with finAPI and there are almost no indirect costs for risk checks, manual post-processing or dunning.

4. What are the advantages of instant payments in online retail?

Instant payments are real-time transfers where the recipient’s account is credited within a maximum of ten seconds. This payment method can be offered as an additional option at checkout to offer customers faster shipping of goods or immediate access to an online application.

This is an extremely secure payment method for the merchant, as chargebacks are only possible in rare exceptional cases. Stores can also use instant payments to refund returns and thus gain an advantage over the competition.

5. Which payment methods can be used for recurring payments or subscriptions?

Merchants can collect payments for subscriptions by direct debit from the customer’s account. Alternatively, the customer could also set up a standing order.


6. How can identity, age and address checks be carried out via the bank account?

With finAPI GiroIdent, it is possible to check and verify this data directly online via the customer’s bank account. Compared to other procedures such as Postident or Videoident, this is faster, more convenient and just as secure. This is particularly relevant when selling products where age verification is required by law or when concluding mobile phone contracts where identity verification is required. The address of new customers can also be verified to ensure it is correct before the goods are dispatched.

7. How can merchants check their customers' creditworthiness? How can customers prove their current solvency?

A quick and simple glance at the account is all it takes to determine current solvency. With the consent of the account holder, finAPI can use GiroCheck to check whether, for example, sufficient funds are available in the account and regular income is being received. Risk factors for online retail, such as direct debit chargebacks or debt collection payments, are also identified when the transactions are analyzed and can be included in the process.

8. Is there an Open Banking solution for dealing specifically with late payments or reminders?

Yes, instead of starting an expensive and time-consuming dunning procedure directly, finAPI offers a customer-friendly receivables management solution with DebitFlex. Friendly payment reminders including a “DebitFlex-link” are sent by post, email, SMS or WhatsApp.

This link or a QR code takes customers to a secure web form where they can allow finAPI to view their account once. Based on the current account data, finAPI determines an individual payment proposal: immediately by online transfer, at a later date by scheduled transfer or a proposal for a personal installment plan.

This makes it easy and safe to find a solution that benefits both customers and retailers.

9. Which role will open banking play in eCommerce in the future?

It is clear that open banking goes beyond pure payments and enriches online commerce with new solutions and services. The possibilities range from secure payments and payment initiation services to identity, age and address verification via the bank account.

Furthermore, open banking offers the opportunity to find joint solutions for late payments and to make receivables management more customer-friendly. The future of open banking in eCommerce promises further growth and offers companies from various sectors the opportunity to offer their customers innovative and individual services.

10. Not all your questions answered yet?

Please get in touch with us. We will be happy to answer your questions about Open Banking and present our product solutions to you in a personal meeting.

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