Open Banking
Open banking is the ecosystem in which banks expose account data and payment functions to licensed third-party providers through APIs, with the account holder's explicit consent. It turns the bank account into infrastructure that regulated software can read from and pay from.
The mechanics rest on two regulated roles. Account information service providers (AISPs) read balances and transactions. Payment initiation service providers (PISPs) start credit transfers from the payer's account. In both cases the customer authenticates directly with their own bank using strong customer authentication (SCA); the third party never sees banking credentials and never holds funds.
The legal foundation in the EU is PSD2, in force since January 2018, which obliges banks to open these interfaces to licensed providers. The successor framework, PSD3 and the Payment Services Regulation, reached provisional political agreement in November 2025 and is expected to apply in 2027–28, with tighter performance requirements for bank APIs.
Why it matters in real estate
Rent is a recurring, high-value payment between parties who already know each other — exactly where card networks add cost without adding value. With open banking, a tenant approves a transfer at their own bank, funds settle over SEPA, and the reference travels with the payment. UrbanPay's Pay product initiates A2A payments this way from 0.25% per successful payment, with no chargebacks and no direct-debit returns; a €1,000 rent payment at 0.25% costs €2.50.
The data side matters too. Account information supports affordability checks during tenant onboarding, and automatic reconciliation carries contract, property, and tenant references. UrbanPay operates this across 19 European markets through regulated partner entities supervised by the FCA and BaFin.
Key facts
- PSD2, in force since January 2018, created the regulated PIS and AIS roles that make open banking possible.
- Strong customer authentication (SCA) is mandatory for account access and payment initiation.
- PSD3/PSR reached provisional political agreement in November 2025, with application expected 2027–28.
- Open-banking payments settle as SEPA credit transfers; the instant variant settles in 10 seconds or less.
Related terms
See PSD2 for the legal foundation, payment initiation for the PIS mechanics, A2A payments for the payment category, and instant payments for the settlement rail.
Frequently asked questions
Is open banking safe for tenants?
Yes. The tenant authenticates inside their own bank's app using strong customer authentication. The initiating provider never sees credentials and never holds funds. UrbanPay's payments run on regulated rails via partner entities supervised by the FCA and BaFin, and client funds never touch UrbanPay's balance sheet.
Do tenants need to install anything?
No. An open-banking payment starts from a link or checkout screen, redirects to the tenant's existing banking app for approval, and returns a confirmation. There is no new account to create, no card to type, and no mandate form to sign. Recurring rent can be set up as a standing order in the same flow.
Which countries does open banking cover?
PSD2 applies across the EU and EEA, and the UK operates an equivalent regime under FCA supervision. Coverage in practice depends on each bank's API quality, which PSD3/PSR is expected to tighten. UrbanPay supports open-banking payments in 19 European markets.
Read the full guide: Open banking for real estate.