Source: https://rivet.global/blog/open-banking-explained
Published: 2026-11-02 · Updated: 2026-11-02 · By Rashidatou K.

# Open banking explained for businesses: UK, EU and US

What open banking is, how it works in the UK, the EU and the US, and how businesses use it for accounting feeds, pay-by-bank checkout and faster onboarding.

## Key takeaways

- Open banking lets regulated third parties read account data or start payments, with the account holder's consent, through secure interfaces.
- In the UK it grew from a 2017 Competition and Markets Authority order covering the largest banks.
- In the EU it comes from PSD2, which made banks open access to licensed account information and payment initiation providers.
- In the US, the CFPB's rule under section 1033 was finalized in 2024 and has since been under reconsideration, so access still runs largely on private agreements.
- Businesses use it for accounting bank feeds, pay-by-bank checkout and faster checks when onboarding customers.

Open banking is the plumbing behind a lot of tools businesses already use: the bank feed in your accounting software, the "pay by bank" button at some checkouts, the instant account check when you sign up for a service. It works differently in each major market, and that affects what is available to you.

## What it is

With your permission, a licensed third party can:

- **read account information**, such as balances and transactions, or
- **initiate a payment** from your account, which you then approve in your banking app.

You approve access through your own bank's login screen. The third party never sees your password, and you can withdraw consent.

## The UK

The UK started early. In 2017 the Competition and Markets Authority ordered the nine largest banks to build standard open banking APIs, overseen by an implementation entity. Today millions of people and businesses use it, and pay-by-bank payments have become a common alternative to cards for bills, tax and larger purchases.

## The EU

The second Payment Services Directive (PSD2) required banks across the EU to give licensed account information providers and payment initiation providers access to payment accounts. Standards vary more between banks than in the UK. The EU is working on a successor package, including a Payment Services Regulation, intended to make access more consistent.

## The US

The US relied for years on data aggregators that often logged in with customers' credentials. The Consumer Financial Protection Bureau finalized a rule under section 1033 of the Dodd-Frank Act in 2024 to require standard access, then moved to reconsider it in 2025. In practice, US access still runs largely through private agreements between banks and aggregators.

## How businesses use it

| Use | What it saves |
|---|---|
| Bank feeds into accounting software | Manual imports and typing errors |
| Pay-by-bank checkout | Card fees and chargebacks |
| Verifying a customer's account | Micro-deposits and days of waiting |
| Cash position across banks | Logging in to several banks to see balances |

For a business that gets paid by transfer, pay-by-bank can also reduce the payee-name mismatches and wrong references that slow down reconciliation. Our [remittance advice guide](/blog/remittance-advice-explained) covers the matching side.

## Limits to know

- It is national or regional. There is no single global open banking system.
- Coverage of business accounts can lag behind personal accounts.
- Pay-by-bank payments are usually final, like other bank transfers. See [instant payments compared](/blog/instant-payments-compared).

## Accounts on Rivet

Rivet gives a company local account details in USD, and in EUR and GBP on Growth, so customers in those markets can pay by bank transfer, including pay-by-bank tools that send a domestic transfer. See [Bank accounts](/accounts).

## Questions

### What is open banking?

A system in which banks let licensed third parties, with the customer's permission, read account information or initiate payments through secure APIs. The customer never shares their banking password with the third party.

### Is open banking safe?

In the UK and EU, providers must be authorized by the regulator, and access needs the customer's explicit consent, given through their own bank's login. Consent can be withdrawn at any time. Check that any app you connect is on the regulator's register.

### What is pay by bank?

A checkout option where the customer pays straight from their bank account through an open banking payment initiation, in place of a card. For the merchant it usually costs less than card acceptance and has no card chargebacks.

### Does open banking work across borders?

Each market's rules cover banks in that market. A UK app can connect to UK banks, and an EU provider to EU banks. Some providers connect in several markets, but there is no single global system.