Beyond payments
Pay by Bank is now a standard part of the checkout conversation. Most PSPs already offer it to merchants in their payment stack because the cost advantage over cards is clear: lower fees, faster settlement, and fewer chargebacks.
This maturity changes the competitive equation. As more volume moves through open banking payments, the payments themselves become harder to differentiate. The margin benefit remains, but it's increasingly shared across the market, diluting its competitive differentiation.
Instead, PSPs that connect their payment infrastructure to the data layer are turning transactions into intelligence. That connection becomes even more critical as the market moves toward recurring payments and agentic commerce: models where payments cannot function without real-time data alongside them.
Every payment carries a data signal. Every data point can shape a payment.
Open banking connects two things that have traditionally sat apart: the movement of money and the financial intelligence that surrounds it.
On the payment side, account-to-account transfers settle instantly, reduce scheme dependency, and give merchants faster access to funds. On the data side, consented bank account access can provide verified identity, account ownership, income patterns, and transaction behaviour in real time. But, when you run both through the same infrastructure layer, they can feed each other: each payment generates data that sharpens onboarding, credit decisioning, and fraud detection, while each data point can trigger, verify, or optimise the next payment.
This loop compounds because payments are the highest quality behavioural data source a merchant will ever access. Bank-verified transaction data carries identity, affordability, spending behaviour, and timing. This is the depth of context that other data sources, such as surveys, browser data, and even card transactions, don't capture at the same level of accuracy or granularity. PSPs that already treat this signal as a commercial asset are finding that it reshapes their position in the value chain.
As payments are the best behavioural data source that merchants have access to, this creates a compounding loop. Bank-verified transaction data carries identity, affordability, spending behaviour, and timing. This is a depth of context that other data sources, such as surveys, browser data, and even card transactions, don't capture with the same level of accuracy or granularity. PSPs that already treat these signals as commercial assets are already finding that it reshapes their position in the value chain.
The commercial shift in motion
The more payments and data are unified operationally and commercially, the more each capability amplifies the other across the merchant lifecycle. The underlying principle: every bank-verified payment is a behavioural signal, and data is the engine that turns those signals into commercial outcomes across the entire merchant lifecycle. That principle plays out across the following three areas.
1. From processing transactions to powering merchant decisions
Bank-verified spending signals give PSPs a role in merchant decisions that extends across the lifecycle.
Before checkout, real spending behaviour replaces demographic estimations. A travel platform targeting customers whose bank data shows consistent airline and hotel spend is working from a materially stronger signal than one relying on interest-based segments.
During and after checkout, the same data informs pricing, personalisation, and risk. Consented financial data reveals category affinity, subscription patterns, and income stability. A lender using enriched transaction data can compress credit decisions while responsibly expanding access. A travel merchant identifying frequent international spend can adjust offers and ancillary services accordingly.
The more a PSP can surface bank-verified spending signals to merchants, the more its role shifts from executing payments to informing the commercial decisions around them.
2. Conversion, pricing, and fraud solved on the same layer
Conversion, pricing, and fraud are interconnected at checkout, even when they sit with different teams internally. The infrastructure that connects them creates a single optimisation surface.
The optimal payment experience depends on the financial context. Who the customer is, what they are buying, and their real-time affordability all influence approval, pricing, and risk. When payment initiation and account data operate at the same layer, merchants can align payment methods, incentives, and financing terms with the actual financial position rather than assumptions.
The result is lower processing costs, higher approval rates, fewer chargebacks, and more intelligent monetisation. Conversion improves because the risk is clearer. Pricing improves because affordability is verified. Fraud declines because the payment itself is bank-authenticated. When payments and data share infrastructure, conversion, pricing, and fraud become outputs of the same system. This matters more as commerce becomes more automated. Agentic commerce requires real-time affordability, verified identity, and programmable payment controls.
3. Faster activation leading to deeper retention
Verified bank data can automate the most friction-heavy elements of KYB: account ownership, business identity, and transaction history, reducing onboarding time by days. The faster a merchant is live, the sooner they transact, generating behavioural data earlier and embedding more deeply into the PSP's infrastructure.
Customer engagement and retention follow. Payment behaviour reveals loyalty patterns with greater accuracy than CRM signals alone, from rising purchase frequency to early signs of churn. The PSPs that provide enriched transaction intelligence become the source of these insights, enabling higher-value services built on top of them.
Each stage feeds the next: Activation accelerates volume. Volume enriches data. Data strengthens merchant services. Stronger services deepen retention. The advantage compounds over time. The gap between PSPs compounding the benefits of this payments and data flywheel and the rest of the market tends to widen as volume and complexity grow.
The infrastructure bar is rising
The commercial case for connecting payments and data exists today. The regulatory and market trajectory make it increasingly difficult to postpone.
Recurring open banking payments in the UK will extend Pay by Bank into subscriptions, utilities, and instalments. This shifts open banking from single transactions to continuous payment flows. Recurring payments generate longitudinal data, enabling smarter retry logic, churn prediction, and lifecycle management. Performance expectations rise with scale.
At the same time, emerging models such as agentic commerce require real-time financial context and programmable payment controls. Payments will not operate in isolation from data when agents are making decisions - and infrastructure will need to support both.
Open Finance further expands the perimeter. In both the UK and the EU, regulators are extending consented data-sharing beyond payment accounts into savings, credit, investments, and insurance. The scope of usable financial data is widening, and providers will be expected to operationalise it responsibly and at scale.
Across markets, the direction is consistent: more data, more programmability, and higher infrastructure standards. AIS connectivity, enrichment capability, and verified data flows are moving from competitive advantage to baseline expectation.
The strategic question worth examining
This perspective leaves us with a question that cuts across product, commercial, and partnership decisions for PSPs: Is your infrastructure treating payments and data as a single intelligence layer or running them in parallel?
That choice shapes margin resilience, merchant retention, and the ability to expand into higher-value services as the market evolves. PSPs unifying payments and data into a single layer are gaining a unique and sustainable edge in the market with this approach.
As regulation expands the data boundaries and commerce becomes more programmable, the returns on this structural advantage will compound, and the cost of assembling it later will rise.