Security is a top priority for payment service providers (PSPs), lenders, and fintechs. If you’ve been looking to implement open banking, you might be wondering how the security of open banking stacks up to traditional payment methods.

Open banking is not only secure: it’s designed to be safer than traditional methods like card-based payments and outdated data solutions like screen scraping.

So you can make the best decision for your business, this guide will aim to explain the security features of open banking and how it compares to traditional card networks.

In this article:

• How secure is open banking?
• Is Pay by Bank more secure than card payments?
• Who can offer open banking services?
• How Yapily can help businesses unlock the power of open banking securely

Are you looking for an open banking provider with broad coverage in the UK and EU? Talk to Yapily to find out how we can help

How secure is open banking?

Open banking is designed to be highly secure, operating through regulated bank Application Programming Interfaces (APIs) rather than traditional credential-sharing methods.

Under PSD2, initiating payments and linking bank accounts for data sharing require secure customer authentication during the authorisation phase. This usually takes place in the form of a facial recognition scan, fingerprint scan, or a secure one-time passcode. This greatly reduces — or almost eliminates — the risk of unauthorised payments, completely reducing the risk of fraud through intercepting payment details, as well as chargeback fraud.

Before open banking, businesses relied on for data sharing, where third-party providers accessed bank accounts using customers’ login credentials. This approach was not only risky but also increased the potential for fraud.

Now, open banking ensures security by providing direct, encrypted connections to banks via their APIs, eliminating the need to store sensitive credentials and significantly reducing fraud risks.

Open banking infrastructure providers, like Yapily, aggregate these bank APIs into a single integration, allowing businesses to connect securely to multiple financial institutions without managing separate connections.

How open banking data sharing works

1. A user grants explicit consent to a third-party provider (TPP).
2. They are redirected to their bank and authenticate via Strong Customer Authentication (SCA), such as biometrics or a one-time passcode.
3. The bank issues a secure access token, allowing the TPP to retrieve customer data for 90 days without storing login credentials.
4. To renew access, users must actively approve or deny reconsent.

With no credential sharing and bank-level encryption, open banking enhances security while keeping customers in full control of their data.

Is Pay by Bank more secure than card payments?

As businesses look for safer and more efficient payment methods, it’s important to compare the security features of both Pay by Bank and traditional debit and credit card payments.

Here’s how they differ:

Who can offer open banking services?

Only regulated third-party providers (TPPs) can offer open banking services.

• TPPs must be licensed by the Financial Conduct Authority (FCA) or another recognised regulator.
• They must register with the Open Banking Directory and obtain a digital security certificate to verify their identity.
• All transactions are authenticated by the user and processed securely via the bank’s infrastructure.

The most common types of data businesses can access through open banking include:

• Customer information: Name, contact details, and verification data
• Account information: Balances, transactions, and account ownership
• Payment details: Payment mandates and scheduled transactions

Instead of becoming a third-party provider yourself, you can use an open banking solution, like Yapily.

How Yapily can help businesses unlock the power of open banking

Yapily is an open banking infrastructure provider that enables PSPs, fintechs, banks, lenders, and other financial institutions to access financial data and initiate payments seamlessly.

We provide secure, scalable, and direct access to banks and financial institutions’ open banking APIs. This access allows our customers to build innovative financial products, streamline payments, and enhance customer experiences—all through a single API integration.

Our ISO 27001-certified infrastructure meets the highest global security standards and is fully Payment Services Directive 2 (PSD2) compliant for regulated, direct bank connectivity, and ensures end-to-end encryption to protect financial data.

With bank-grade security, GDPR compliance, strong customer authentication, and secure access controls, Yapily safeguards sensitive financial information at every level.

Here’s what you get when you use Yapily:

Comprehensive open banking coverage with AIS and PIS

Yapily provides one of the broadest open banking networks in Europe, offering direct API access to thousands of banks across multiple countries. Unlike many providers, we support both Account Information Services (AIS) and Payment Initiation Services (PIS), giving businesses the flexibility to harness financial data and process transactions more efficiently.

• AIS enables businesses to access real-time financial data for improved lending decisions, income verification, and personalised financial management tools. Lenders can assess affordability more accurately, while fintechs can build smarter, data-driven financial services.
• PIS allows businesses to facilitate instant, secure bank-to-bank payments, bypassing traditional card networks. This results in lower transaction fees, faster settlements, and reduced fraud risk—ideal for PSPs, merchants, and financial platforms seeking a cost-effective alternative to card payments.

By integrating both AIS and PIS, Yapily enables businesses to offer better financial experiences, increase efficiency, and stay ahead of regulatory changes.

Developer-first API for seamless integration and scalability

Designed with developers in mind, Yapily’s infrastructure ensures a smooth, scalable, and high-performance open banking integration. With a single API connection, businesses can securely connect to multiple banks and financial institutions across the UK and Europe, eliminating the need for complex, individual integrations.

This means:

• Faster deployment with minimal development overhead
• A more streamlined approach to managing financial data and payments
• A future-proof infrastructure that scales alongside business growth

Yapily provides pure open banking access, allowing businesses to retain full control over financial data, payments, and compliance.

By eliminating reliance on screen scraping or third-party aggregators, Yapily ensures a more secure, transparent, and reliable connection to banking infrastructure. This enables businesses to build customised financial solutions that seamlessly integrate with their existing services.

Future-proofing payments with innovation and reliability

As open banking adoption grows, Yapily helps businesses stay ahead by supporting emerging payment models, including:

• Pay by Bank: A secure, real-time alternative to card payments that allows customers to pay directly from their bank account, reducing processing fees and improving settlement times.
• Sweeping and Variable Recurring Payments (VRP): Automated fund transfers between accounts, enabling businesses to optimise cash management, automate financial processes, and offer more flexible recurring payment solutions.
• Bulk Payments: The ability to initiate multiple bank transfers simultaneously, improving efficiency for businesses handling payroll, supplier payments, and high-volume transactions.

By reducing dependence on traditional card networks, Yapily helps businesses lower transaction costs and fraud risks, making payments faster, safer, and more cost-effective.

Get started with Yapily

To learn how Yapily can help your business offer secure open banking payments and data solutions, book a call with one of our open banking experts today.