When Open Banking was introduced to the European market, it was hailed as one of the most significant shifts in financial technology. The vision was compelling, with consumers and businesses alike benefiting from features such as direct account-to-account payments, a reduction in dependence on conventional card schemes, and reduced transaction costs. The premise of Open Banking promised a new form of transactional sovereignty introduced with Payment Service Directive 2 (PSD 2), however the reality of this was far more complex. In the early stages of adoption, online businesses realized that the idea of underpinning Open Banking was theoretically sound, but created technological challenges regarding deployment in e-commerce and real-world settings.In many instances, there were no technical tools available to utilise. What PSD2 provided was not a complete technical solution, but the regulatory foundation upon which one could be built. By standardising access to banking infrastructure, it enabled fintechs, technology companies and payment platforms across the UK and Europe to develop new services without first having to negotiate individual commercial relationships with every bank. This fundamentally lowered the barriers to entry, allowing innovation to expand beyond a handful of established local providers and helping to accelerate the development of the broader European payments ecosystem.With a development of infrastructure and innovative features to back this new way of accepting payments by 2024, the industry was moving beyond the idea of Open Banking as simply a regulatory innovation and beginning to recognise it as a real-world payment infrastructure capable of helping businesses solve practical operational challenges, when implemented correctly. In many respects the evolution of Open Banking mirrors previous waves of fintech innovation, where regulatory change created the initial opportunity, but commercial execution ultimately determined long-term adoption.Why Open Banking Initially Struggled in E-CommerceIn the early stages of market expansion, one of the main misconceptions around Open Banking was that lower transaction costs alone would be enough to drive mass adoption. However, payment infrastructure is rarely adopted on cost alone, and merchants also need reliability, strong conversion, customer familiarity and trust, fraud prevention, operational transparency and settlement certainty.In many of these areas, early Open Banking models found it difficult to compete with traditional acquiring infrastructure. Redirected customer journeys introduced friction at checkout, while payment experiences often varied significantly depending on the provider, the bank and the market. Payment confirmation flows did not yet exist, refund management remained relatively underdeveloped and in some cases, merchants would be notified that a transaction had been initiated without having sufficient certainty that funds had been fully settled. For online businesses focused on conversion optimization, these weaknesses created hesitation. The infrastructure may have worked technically, but the user experience often felt disconnected from the realities of digital commerce. Merchants understood the chargeback process, and payment flows had become familiar, predictable and operationally embedded.One of the most overlooked lessons from Open Banking’s first decade is that payment innovation succeeds only when operational risk decreases alongside transaction costs. In practice, merchants are willing to pay more for payment methods that deliver predictability than for cheaper alternatives that introduce uncertainty into fulfilment, reconciliation or customer support processes.Reconfiguring Open Banking for Real-World Business Use CasesFintechs soon began to realise that Open Banking was not simply about replicating banking infrastructure online, it had to evolve into a merchant-led operational ecosystem. This required a significant shift in thinking. Rather than position Open Banking as an alternative payment rail by default, startups began focusing on real-world e-commerce challenges around transaction security, conversion optimization, settlement transparency and fraud prevention. One of the most important developments in this evolution was the creation of infrastructure that could verify the receipt of funds, not just the initiation of payment. This distinction mattered for merchants. Conventional initiation-only models created room for ambiguity, delays, intentional and friendly fraud, where customers or bad actors could reverse the payment after goods or services had already been delivered. That began to change with the development of Confirmation of Receipt infrastructure, which significantly altered the operational dynamics. With real-time confirmation that funds had settled, merchants gained greater confidence in the success of Open Banking transactions, while friction in fulfilment processes was reduced. Simultaneously, the wider user experience around Open Banking payments also began to improve.For fintech companies, this process was driven by payments flows built around customer behaviour, rather than a bank’s architecture alone. Integrated payment experiences, ease of authentication, reduced redirects and more consistent checkout environments helped Open Banking become more viable for digital first businesses. It marked a major watershed moment for the industry. Open Banking was not being created solely to implement a compliance-led change, it was increasingly being applied as operational infrastructure for digital retail at scaleFrom my observation of payment infrastructure deployments, the most successful Open Banking implementations were not those that focused solely on payment acceptance within banking infrastructure, but those that treated payments as a balance between merchant security and a customer-friendly experience. The providers that achieved this balance and ultimately meaningful adoption understood that every additional step in a payment journey has a measurable impact on conversion rates.Sovereignty over the transaction from the conventional card schemeOne of the more significant conversations in the 2024 fintech landscape is the growing focus on transactional sovereignty. Many online businesses had come to view traditional card payment infrastructure to be a source of a series of operational and commercial dependencies, all of which over the years evolved to become more costly and limiting. Interchange fees, scheme costs, chargeback exposure, settlement duration and not allowing flexibility in payments burdened merchants who traded internationally. Open Banking introduced a different proposition. By enabling account-to-account payment infrastructure businesses gained more control over the flow of payments, visibility into transactions, and settlement mechanics without depending solely on traditional card ecosystems. This did not mean that card acquiring became obsolete. But Open Banking introduced something strategically significant into the marketplace: optionality. For the first time merchants had an opportunity to start diversifying their payment infrastructure beyond the current reliance on global card schemes. This shift became increasingly valuable as businesses sought better operational resilience, to reduce costs of transaction and to have more direct command of financial infrastructure.The market increasingly demonstrates that merchants do not adopt payment innovation because it is new; they adopt it when it removes friction from existing business processes.Open Banking versus Traditional Acquiring: Different Models for Different ToolsThe discussion around Open Banking became far more concerned with practical application, as opposed to ideological benefits, in 2024. The reality is that Open Banking and traditional acquiring solve different operational needs; with the strongest payment ecosystems increasingly integrating the two methodologies strategically. Open Banking performs particularly well when dealing with high-ticket transactions, recurring C2B and B2B payments, chargeback exposure, cross-border settlement optimization, direct bank transfer, and companies focusing on lower transaction costs and settlement transparency. Traditional acquiring by contrast, remains highly effective for impulse consumer purchases, subscription ecosystems, worldwide mass-market e-commerce, mobile-first customer behaviour, and where speed, familiarity and frictionless checkout remain critical. This is why the future of payments is unlikely to be determined by a single winner. Instead, the industry is moving towards orchestration - infrastructure capable of intelligently combining multiple payment rails based on customer behavior, transaction type, geography, risk profile and operational goals. Looking ahead, the competitive advantage of payment providers is likely to shift away from simple connectivity and towards intelligent orchestration, risk management and transaction-level decision making.The Future of Open Banking To Come Is Commercial, Not RegulatoryA broader industry lesson is that financial infrastructure should be evaluated through the lens of operational outcomes rather than technical capability alone. The existence of a payment rail does not create value by itself; value emerges when merchants can reduce fraud, accelerate settlement, improve cash-flow visibility and simplify financial operations at scale.The fintech companies influencing the next phase of Open Banking are not just adding APIs or payment connections. They are building transaction infrastructure to accommodate merchant requirements, customer psychology, conversion optimisation, fraud suppression as well as operational scaling. That’s where Open Banking truly becomes transformative. Not as the theoretical substitute for card schemes, but as a commercially, technologically mature infrastructure layer that could support today’s digital commerce in ways early implementations could not. The industry is making that leap in 2024. And for online businesses, that transition could become one of the most significant shifts in the future of global payments.As account-to-account payments mature, the key differentiator will no longer be access to banking infrastructure but the ability to transform payment data into actionable operational intelligence for merchants. Merchants that treat payment infrastructure as a strategic business capability rather than a back-office function are increasingly finding opportunities to improve margins, customer retention and operational resilience.One of the key lessons from Open Banking's evolution is that technology alone does not determine adoption. Infrastructure becomes commercially successful only when it aligns with genuine operational needs, addressing real-world payment challenges while strengthening the trust and confidence of merchants and payers, who are ultimately the stakeholders and beneficiaries of these innovations.No#OpenBankingSerhii ZakharovCEOPayDo16 Apr, 2024