Benefits of Open Banking Payments for E-commerce Merchants

Running an e-commerce store often means dealing with high payment fees, slow processing, and customers dropping off during checkout. It's a common challenge for many merchants.

Open banking for e-commerce business offers a solution—one that cuts costs, simplifies processing, and delivers a seamless experience for both you and your customers. With financial technology evolving at lightning speed, staying competitive means offering the best payment options to customers—and traditional credit cards often fall short.

Open banking payments bring a modern solution that simplifies online transactions for everyone involved. In this blog, we’ll explore why open banking is a must-have for e-commerce merchants and why Noda is your ideal partner for integrating this innovative payment technology for e-commerce.

What is Open Banking?

Open banking is a system that allows third-party financial service providers, like Noda, to access customer banking information (with consent) through APIs. This means customers can authorise payments directly from their bank accounts without needing to enter card details or switch between apps. It’s fast, secure, and user-friendly, creating a new paradigm for e-commerce payment processing.

In Europe, open banking is fully regulated under PSD2, and it’s quickly moving beyond being a niche concept. Adoption is rising, and even major players like Visa are preparing to introduce their own open banking solutions.

For e-commerce merchants, open banking can streamline payments, reduce fees, and offer an enhanced customer experience—ultimately leading to higher conversion rates.

How is Open Banking Different from Direct Debit?

While both open banking and direct debit use direct bank integration, they function in different ways.

Direct debit is often used for recurring payments like subscriptions or utilities, where merchants charge automatically. It works well, although the processing time can take a few days–which isn’t ideal for time-sensitive transactions.

Open banking, on the other hand, uses what’s called a push-based approach, where customers have full control by initiating payment themselves. Currently, it’s mainly used for one-off payments, though with the development of variable recurring payments (VRP), recurring payments are becoming increasingly available. This makes transactions faster and more transparent, especially for industries like e-commerce, travel, and gaming.

Plus, by connecting directly to the bank, open banking reduces intermediaries, lowering costs and enhancing security—making it an ideal choice for modern e-commerce.

Benefits of Open Banking for E-commerce Merchants

Open banking is transforming e-commerce transactions by providing a streamlined, direct payment method that removes unnecessary intermediaries.

This e-commerce payment solution helps businesses reduce costs, improve processing speed, and enhance overall security, making it easier to deliver a seamless checkout experience that today’s customers expect.

Lower Transaction Costs

Credit card fees have been a persistent pain point for online merchants, eating into margins and making each sale slightly less profitable.

Open banking payments eliminate the reliance on card networks, significantly reducing or completely removing those hefty fees. Instead, payments move directly between bank accounts, minimising the need for intermediaries and their associated costs.

With Noda, you get an efficient payment route that sidesteps traditional merchant fees—a massive benefit for businesses looking to improve profitability. Think of it as an e-commerce money transfer solution that ensures more of your revenue stays in your hands.

Faster, Real-Time Payment Processing for E-commerce

Waiting for payments to settle can create cash flow problems, particularly for small or scaling e-commerce businesses. Open banking payments are processed in real-time or near real-time, meaning that funds appear in your account (almost) instantly. 

The days of waiting for banks or credit card companies to process payments are over. Noda’s payment platform gives you faster access to funds, ensuring your e-commerce business has the cash flow needed for smooth operations.

Enhanced Security and Reduced Fraud Risks

Card-not-present (CNP) fraud made up about 63% of the total value of card fraud within the European Economic Area (EEA) in 2022, showing just how vulnerable traditional e-commerce merchant services can be. With open banking, payments are authenticated directly through the customer's bank, effectively reducing this risk and providing a more secure payment option.

Customers love the added security, and as an e-commerce merchant, you’ll enjoy the increased customer trust and no chargebacks to handle. Noda ensures that both you and your customers have peace of mind when processing payments, making open banking a highly secure e-commerce payment solution.

Seamless Customer Experience

Modern shoppers demand simplicity and speed. They’re looking for a straightforward, frictionless checkout experience, and traditional payment forms—like manually entering credit card details—just don't fit the bill anymore.

Customers using open banking are redirected to their bank to confirm the payment, and then back to your site. Fewer steps mean fewer drop-offs, translating to improved conversion rates.

Noda’s open banking solution integrates smoothly with your online store to make payments easy and intuitive. Customers can authorise payments in a couple of clicks, simplifying the entire process while improving the likelihood of completed purchases.

Increased Flexibility for Customers

Open banking provides customers with more choices for making payments. Unlike traditional card payments that require specific bank affiliations or card types, open banking allows users to pay directly from their own bank account.

This flexibility leads to higher customer satisfaction and reduces payment barriers, ensuring a smoother checkout experience.

Truly Global Payments

Scaling internationally brings a host of payment challenges—currency exchange, international transfer fees, and varying payment methods in each country. Open banking solves these challenges by offering a standardised, global solution for payments.

Through Noda, you can provide instant and cost-effective transfers across 28 countries, including the UK, Europe, Canada, and Brazil, making it easier to accept payments from diverse regions.

Noda’s e-commerce payment processing services make international scaling more feasible, empowering you to reach new markets and tap into global opportunities with ease.

How to Integrate Open Banking

One of the easiest ways to integrate open banking payments is by using a payment initiation service provider (PISP) like Noda, which can work by adding open banking to your current payment methods. This can be done alongside your existing payment methods, with different integration options available:

Direct API Integration: If you want full control over the payment experience, direct API integration gives you the ability to fully customise each part of the payment journey. While it demands more technical skills, it offers maximum flexibility.

Hosted Payment Pages (HPPs) and SDKs: For a quicker, simpler setup, you can use hosted payment pages or SDKs. These tools are easy for developers to implement and get your payments running smoothly, though with a bit less customisation.

E-commerce Plugins: If you're using popular platforms like WooCommerce, Magento, OpenCart, or PrestaShop, Noda provides plugins to make integration even easier. Just install the e-commerce plugin, run a basic configuration through Noda Hub, and you're ready to go.

Integrating on Your Own

If you prefer a hands-on approach, self-serve options are available to access raw open banking data directly. However, this route can be challenging — banks often use different APIs, making it hard to standardise and integrate without technical know-how.

Many e-commerce businesses find it more efficient partnering with an e-commerce payment solution like Noda. We handle the complexity for you by connecting you to major banks across Europe and other regions, all under one payment button. This makes it easier for businesses with international customers to handle payments effortlessly.

Why Choose Noda for E-commerce Payments?

Noda makes e-commerce payments easy with API integration, ready-made plugins, and no-code solutions. Using blockchain and AI, our platform provides full control and integrates smoothly, without the usual headaches.

With Noda, you get broad bank coverage of over 2,000 banks across 28 countries, a payment success rate of over 94%, and practical features like payment links and data services.

Our platform provides you with personal manager support and Noda Buffet, a tailored payment flow that helps improve conversion rates and ensures smooth transactions.

Take Control of Your Payments with Noda Today

Noda is transforming e-commerce payments through open banking—offering greater security, reduced costs, and a seamless experience for your customers. It's the competitive advantage your business needs to thrive in today’s market.

Tired of complicated payment methods? Try Noda and experience the ease of open banking.