Given the rise in online payments and the increase in demand for digital products and services since the start of the pandemic, reverse payments was something we were keen to launch. Reverse payments are not refunds as Open Banking payments cannot be unwound. This is why the term ‘reverse’ is used to describe them. Open banking payments are fast, secure, and cost-effective. But until recently, they lacked a clean and compliant way to issue refunds.

Unlike card payments, open banking transactions can’t simply be reversed. That’s where reverse payments come in—a new approach that enables merchants to return funds via a second open banking transaction, often in seconds.

In this article:

• What are open banking reverse payments?
• How reverse payments work in practice
• 5 benefits to offering reverse payments
• Why use Yapily to offer reverse payments?

Looking to offer a better refund experience for your merchants? Yapily makes it easy to embed reverse payments in your platform—book a call to find out how.

What are open banking reverse payments?

A reverse payment is a second account-to-account (A2A) payment, initiated from the merchant to the customer to return funds after a purchase. It mimics a refund, but unlike cards, which are processed through the card schemes, open banking refunds are executed as** standalone bank transfers**.

Open banking payments are push-based. Once a customer sends money, the transaction is settled and irrevocable. That means refunds can’t simply “undo” the original payment: they must be initiated as a new outbound transfer.

To make this seamless, some banks — especially in the UK — now return the payer’s account details during the original payment flow (with customer consent). PSPs and platforms can store these details and use them to issue refunds automatically.

This is what we refer to as a reverse payment.

How reverse payments work

Reverse payments involve two steps:

1. The initial payment

When a customer pays a merchant using open banking, a Payment Initiation Service Provider (PISP)—such as a PSP or platform integrated with Yapily—can include a flag in the payment request asking for refund account details.

If supported by the bank, the customer consents to share their account details, and the bank returns those details in the payment response.

These details are stored securely and linked to the original payment.

2. The reverse payment (refund)

If a refund is needed later, the PSP or merchant platform can retrieve the stored details and initiate a new Open Banking payment from the merchant’s account back to the payer’s.

The customer doesn’t need to re-authenticate or submit bank details. The refund lands in the original account, often in seconds.

5 benefits to offering reverse payments

Here’s how reverse payments can help you deliver more value to your merchants:

1. Instant refunds improve merchant NPS

Card refunds are slow. They often take 3 to 5 working days to reach the customer, especially when international settlement or multiple intermediaries are involved. That delay creates frustration, increases support volumes, and erodes post-purchase trust.

By enabling reverse payments, you allow your merchants to refund directly to the customer’s bank account in seconds using faster payment rails like Faster Payments (UK) or SEPA Instant (EU).

Faster refunds mean fewer complaints, stronger customer relationships, and better retention. In a competitive market, it’s a simple way to help merchants offer a premium experience that keeps buyers coming back.

2. Automation reduces operational overhead

Many merchants still rely on manual processes to issue refunds: requesting bank details via email, exporting payment records into spreadsheets, or logging into separate payout systems. It’s inefficient, error-prone, and not scalable.

Reverse payments simplify this by allowing the payer’s account details to be captured at the time of the original transaction. With the necessary payment details and financial information securely stored, refunds can be triggered automatically via API. No additional input is required from the customer, and your platform can offer a completely self-serve refund experience. That reduces operational complexity for your team and for your merchants.

3. Closed-loop flows reduce fraud and payout errors

When merchants have to collect refund details manually, there’s a higher risk of fraud and mistakes. A mistyped account number can lead to funds being sent to the wrong person. A bad actor might request a refund to a different account entirely.

Reverse payments eliminate that risk. Because the payer’s account details are retrieved from the bank—with explicit user consent during the original payment—refunds can only be sent to that verified account. It’s a closed-loop system by design. That means fewer support issues, better fraud controls, and peace of mind for your merchants.

4. Direct refunds lower cost and improve margins

Card payments come with layers of fees, from interchange and scheme charges to acquirer costs. Refunding a transaction doesn’t guarantee you’ll recover those fees. On top of that, you’re still exposed to chargebacks, which can lead to disputes and revenue loss.

However, because reverse payments are push-based and happen over bank rails, there are no card scheme fees involved. And because refunds are initiated by the merchant, you’re not exposed to chargeback workflows. This gives you and your merchants more predictable margins, better cash flow management, and simpler reconciliation.

5. A better refund experience strengthens your product

As open banking adoption grows, expectations are shifting. Merchants increasingly want feature parity with cards, and that includes the ability to issue fast, frictionless refunds.

By offering reverse payments, you can position open banking not just as a cost-saving alternative but as a complete payment experience. It enables new use cases like instant payout wallets, automated returns, and scheduled disbursements, all through a single API integration (when you use an open banking provider like Yapily).

Why use Yapily to offer reverse payments?

Reverse payments may be available through multiple providers, but not all implementations are created equal.

Yapily offers one of the most flexible, developer-focused ways to embed open banking refunds into your platform.

Here’s what makes us different:

Infrastructure-first model that gives you full control

Yapily doesn’t sit between you and your users. Unlike providers that insert branded layers into the user flow, Yapily is pure infrastructure and can be fully white-label from day one. That means you control the refund experience end-to-end, from authentication to payout confirmation. Whether you’re building custom merchant dashboards, embedding payments into onboarding flows, or automating refunds via backend logic, Yapily gives you the flexibility to do it your way.

We also offer Hosted Solutions, so you can get to market quickly while we work on building your custom solution.

Coverage for both consumer and business accounts

Most open banking platforms prioritise retail account connectivity. Yapily goes further, offering robust access to both personal and business bank accounts across the UK and Europe. That’s a critical differentiator if your clients include SMEs, platforms serving B2B merchants, or fintechs dealing with business disbursements.

In the UK, Yapily supports reverse payments across all CMA9 banks using the OBIE standard, meaning you can retrieve refund account details and issue instant refunds via Faster Payments.

In Europe, Yapily supports payer detail retrieval where available via Berlin Group APIs, and continues to expand coverage as banks enhance their endpoints. The result is a future-ready integration that lets you serve both consumer and commercial flows across multiple markets.

A single API for both pay-ins and refunds

With Yapily, there’s no need to integrate multiple open banking APIs or manage separate refund flows. You can retrieve refund account details during the original payment, store them securely, and initiate a reverse payment later using the same API framework. The original payment ID acts as the anchor for both transactions, simplifying reconciliation and enabling clean refund logic within your platform.

Pay by Bank and open banking data functionality through one provider

Because Yapily is both a Payment Initiation Service Provider (PISP) and an Account Information Service Provider (AISP), you can offer your merchants both open banking payments and data solutions through one integration.

For real time payments, you can offer:

• Single and scheduled payments
• Bulk payments
• Variable recurring payments

As well as standard AIS features, we also offer Yapily Data Plus, where you can take advantage of enriched financial data. We use large language models (LLMs) and artificial intelligence to:

• Standardise merchant names to make them easily recognisable, as well as identify the payment provider.
• Categorise transactions, with 140 transaction categories for business use case, and 90 for consumer accounts.
• Determine if a payment is recurring. With Data Plus, we can identify whether a transaction is recurring or a one-off.

Ready to build better refund flows?

Yapily enables platforms and PSPs to offer instant, secure reverse payments without sacrificing control. If you want to reduce refund friction, cut costs, and deliver a refund experience that matches your payment experience, Yapily gives you the infrastructure to do it.

Book a call with our team to see how reverse payments can work across your UK and EU integrations.