Insights, Open Banking

What makes our Open Banking payments special?

Modulr By Modulr on 21 July 2021   •   5 mins read
<span id="hs_cos_wrapper_name" class="hs_cos_wrapper hs_cos_wrapper_meta_field hs_cos_wrapper_type_text" style="" data-hs-cos-general-type="meta_field" data-hs-cos-type="text" >What makes our Open Banking payments special?</span>

Real-time payments, enabled through Open Banking, are a critical value add for customers and merchants or businesses alike, across numerous sectors. However, realising their full potential will depend on effective partnerships with specialist FinTechs that provide not only Open Banking-enabled API connectivity but also account infrastructural capability.

Not all payment initiation service providers (i.e. those that offer Open Banking enabled payments) on the market deliver the same functionality. Here, we explore why fintech partners aren’t created equal, and what you should look out for when selecting the perfect payment initiation service provider for your business. We'll also tell you our secret sauce for Open Banking, too.


“We're leveraging Modulr’s infrastructure and APIs to offer an eMoney account to every customer. And, through the Open Banking integration, we're effectively creating a translation layer for money protocols; allowing our customers to easily interoperate between conventional and crypto currencies. All UK bank accounts can now speak Bitcoin through our platform." Excerpt from the Bottlepay case study.

Pete Cheyne, Founder at Bottlepay
Learn how Open Banking Payments help businesses settle funds faster, reduce  fraud and deliver a better customer experience.    Download our Guide →


But first, what is a Payment Initiation Service Provider?

A payment initiation service provider (PISP) is broadly defined as any third party that facilitates direct transferral of payments from a customer’s account to a business account. As such, they are a critical component of Open Banking. Customers need to opt-in for the payment initiation service provider to be able to perform the transfer.

However, the level of service varies between third party companies. So how can you be sure that you’re getting the most out of your payment initiation service provider?

Why Payment Initiation Service Providers Aren’t Created Equal

Although PISPs perform the same basic function, not all providers can offer the underlying account infrastructure that makes the system work to its full potential. Pure play PISPs can only initiate a payment, but not confirm if the customer’s funds have arrived in a business account as that information sits outside their ecosystem.

For businesses, not knowing whether customers’ funds have arrived leaves them in a precarious position. Indeed, one of the greatest benefits of Open Banking payments is that, when leveraged fully, businesses can confidently release goods and services without worrying about prolonged waits for funds to settle and clear. On the fintech side, this means businesses are unable to tell customers if their money has arrived in their app.


What to Look for in Your Payment Initiation Service Provider

There are additional features that distinguish the best payment initiation service providers. These include:

  • Payment Initiation services that integrate with EMI accounts for live confirmation of funds, reconciliation and automated processing of refunds
  • Charges that are based solely on successful transactions so you’re never on the hook when transfers don’t go through
  • A proven modern technology stack
  • Direct access to the Faster Payments network. For example, Modulr holds and settles funds directly at the Bank of England


What Modulr puts in our Open Banking payments Secret Sauce

We combine Open Banking payments with dedicated account infrastructure and additional payment services. This is the Modulr secret sauce and we're the only one to do it at scale; talk to us about it! In this way, businesses can open a dedicated eMoney account per customer or client and receive instant confirmation once funds arrive, enabling them to also process refunds easily with real-time automatic settlement. We give you certainty funds have arrived, while a pure play PISP can only tell you the bank has agreed to instruct the payment but there could be a delay or payments are recalled without the PISP having visibility of it as it sits outside their ecosystem.

We're able to do this because Modulr operates entirely within the funds flow from end to end. So, we can collect the money via payment initiation, but we'll also tell you instantly when the funds arrive into your customers' dedicated Modulr accounts (i.e. connected to your app). You can then leverage the entire Modulr payments platform, by connecting it to spending cards, Direct Debits, bank transfer and more. This also eliminates the need for a business to manage multiple suppliers and integrate multiple systems.

PISPs like Modulr also enable fully customisable Payment Initiation. This allows you to:

  • Embed payment initiation in whatever way best suits your business: create your own payment pages for your customers
  • Send customers a pre-populated link and initiate single and recurring payments via app, SMS, email invoice or QR codes at point-of-sale
  • Combine with a Modulr accounts infrastructure for certainty of fund receipt and enhance your account proposition 
  • Innovate and experiment with your payments process knowing an entire ecosystem of other payment methods is ready to switch on with an API call

The full benefits of Open Banking payments are finally within reach for companies of all sizes and scope. However, if businesses are to realise the potential of Open Banking, then they will need to partner with FinTechs that can deliver much more than transactional support.

Partnering with the right PISP, like Modulr, can plug businesses into a new world of exciting capabilities, enabling access to an entire payments ecosystem with limitless potential. To find out more, use our Payments Map to analyse the current state of your operations or contact us to transform your business today.