Updated: September 2025 (Originally published October 2022)
TL;DR: Open banking payments offer significantly lower costs than cards with instant settlement, but providers have limited coverage. Multi-rail aggregation through embedded finance APIs gives platforms complete coverage while maintaining the cost and speed advantages.
Understanding Open Banking for B2B Payments
"Open banking enables direct account-to-account (A2A) transfers between businesses, bypassing card networks to deliver instant settlement at a fraction of traditional payment costs."
Unlike card payments that route through multiple intermediaries, open banking creates a direct connection between bank accounts. For B2B platforms, this fundamentally changes the economics of payment processing. Card payments typically involve multiple intermediaries and associated fees, while open banking eliminates most intermediaries. The settlement is instant rather than taking multiple business days, and fraud rates drop dramatically because customers authenticate directly with their bank.
The Explosive Growth of Open Banking
The numbers tell a compelling story. According to UK Open Banking data, cumulative open banking payments reached 27 million by end of 2021—a 500% increase in just twelve months. Juniper Research projects even more dramatic growth ahead, with global open banking payment volume expected to exceed $116 billion by 2026, up from just $4 billion in 2021.
This growth reflects fundamental advantages that resonate particularly in B2B contexts. When suppliers can dramatically reduce payment processing costs, they gain significant pricing flexibility. When payments settle instantly instead of days later, cash flow improves substantially. When fraud essentially disappears through bank-level authentication, operations simplify. These aren't marginal improvements—they're transformative changes to business economics.
The Coverage Problem Nobody Discusses
Here's where reality hits: every open banking provider has significant limitations. Building comprehensive open banking connections is far more complex than most platforms realize. Different markets use different API standards. Each bank has its own implementation quirks. Regulatory requirements vary by country—UK providers need FCA authorization, EU providers need PSD2 licenses, and crossing borders adds layers of complexity.
"The open banking paradox: the technology that promises universal bank connectivity actually delivers fragmented coverage, with typical providers reaching only 60-80% of banks in their home market."
The technical challenges compound these issues. While card networks have been building infrastructure for over 20 years, open banking only really started with PSD2 in 2018. The ecosystem remains immature, with coverage gaps that frustrate platforms trying to serve diverse customer bases. A UK-focused provider might cover major British banks well but completely miss European institutions. An EU provider might excel in Germany but have no presence in the UK.
How Multi-Rail Architecture Solves the Coverage Challenge
Multi-rail open banking takes a fundamentally different approach. Instead of relying on a single provider's limited coverage, it aggregates multiple providers through a unified API. This creates comprehensive coverage by combining each provider's strengths.
Single Provider Limitations | Multi-Rail Solutions |
|---|---|
70% bank coverage in one market | 95%+ coverage across markets |
Single point of failure | Automatic failover between providers |
One set of features | Best capabilities from each provider |
Vendor lock-in | Flexibility to add/change providers |
The architecture works through intelligent orchestration. When a payment request comes in, the system identifies which provider best serves that particular bank and routes accordingly. If one provider experiences issues, the payment automatically fails over to an alternative. From the platform's perspective, this complexity disappears behind a single, unified API.
Real Implementation Impact
Consider how this transforms a B2B marketplace's payment operations. Before implementing multi-rail open banking, they're likely processing everything through cards with traditional fee structures. Large B2B transactions become expensive—payment processing costs can significantly impact margins on high-value transactions. Settlement delays create cash flow challenges for suppliers. Chargebacks and disputes consume operational resources.
After implementing multi-rail open banking, payment processing costs drop dramatically. Instant settlement improves supplier satisfaction and cash flow. Fraud virtually disappears because buyers must authenticate with their bank. The platform can pass savings to users while generating new revenue from improved economics.
Technical Architecture That Enables Scale
Building multi-rail open banking requires sophisticated technical orchestration that most platforms underestimate. The routing layer must intelligently select providers based on bank coverage, current performance, and cost optimization. Different providers return data in different formats, requiring normalization for consistent downstream processing. Error handling becomes complex when managing multiple potential failure points.
The compliance layer adds another dimension of complexity. Each provider operates under different regulatory frameworks. Data residency requirements vary by jurisdiction. Audit trails must maintain integrity across multiple systems. This is why attempting to build multi-rail capabilities internally typically takes 12-18 months and rarely achieves the robustness of specialized solutions.
Strategic Implications for Platform Business Models
"Platforms offering multi-rail open banking don't just reduce payment costs—they transform their value proposition by enabling pricing strategies impossible with traditional payments."
The strategic advantages extend beyond direct cost savings. Platforms can enter price-sensitive market segments previously unreachable due to payment economics. Merchants gain competitive advantages through lower transaction costs. The instant settlement improves operational efficiency throughout the ecosystem.
This creates powerful network effects. As more merchants adopt open banking for its cost advantages, buyers become familiar with the payment method. Increased adoption drives platform stickiness—merchants won't easily leave a platform that provides such significant payment savings. The platform becomes essential infrastructure rather than just another vendor.
The Build vs Buy Strategic Decision
Platforms face a critical decision: build multi-rail capabilities internally or integrate through specialized providers. Building requires establishing relationships with multiple open banking providers, creating separate technical integrations for each, managing compliance across jurisdictions, and maintaining ongoing updates as providers evolve. The timeline typically stretches 12-18 months with significant ongoing maintenance burden.
Buying through embedded finance APIs provides immediate access to pre-integrated providers, unified compliance handling, and continuous improvements as new providers join the network. Implementation typically takes 4-6 weeks. The trade-off is some loss of control over the payment stack, but for most platforms, the speed and comprehensiveness of bought solutions far outweigh theoretical control benefits.
Future-Proofing Payment Infrastructure
Open banking continues evolving rapidly. Variable Recurring Payments (VRP) promise to transform subscription and recurring billing. Commercial APIs are expanding beyond consumer payments. Cross-border capabilities improve monthly. New providers enter the market regularly, each potentially offering unique coverage or features.
Multi-rail architecture provides natural future-proofing. New providers can be added without changing the platform integration. Geographic expansion becomes a configuration change rather than a development project. Feature adoption happens automatically as providers enhance their offerings. This flexibility proves invaluable as open banking matures and expands.
The Path to Comprehensive Embedded Finance
Multi-rail open banking often serves as the entry point to broader embedded finance transformation. Platforms that successfully implement payment innovation naturally expand into adjacent financial services. The same infrastructure that enables multi-rail payments can power embedded invoicing, accounts payable automation, expense management, and working capital solutions.
"The strategic choice isn't between building best-in-class core features OR comprehensive functionality—embedded finance enables both by letting platforms build their differentiation while buying financial infrastructure."
This approach allows platforms to maintain focus on their core value proposition while offering the comprehensive financial features users expect. Rather than diluting engineering resources across financial and core product development, platforms can leverage specialized providers for financial features while their teams build what makes them unique.
Making the Implementation Decision
The decision to implement multi-rail open banking should align with platform strategy and user needs. Platforms processing significant B2B payment volume see immediate ROI through cost savings alone. Those serving price-sensitive markets gain competitive advantages. Platforms with international ambitions benefit from multi-market coverage.
The implementation process starts with assessing current payment flows and costs. Calculate potential savings based on transaction volume and average size. Consider the competitive advantages of offering instant, low-cost payments. Evaluate how improved cash flow might benefit your merchants. Most platforms discover the ROI justifies implementation within months rather than years.
Conclusion
Multi-rail open banking represents more than incremental payment improvement—it's a fundamental shift in B2B payment economics. By aggregating multiple providers through embedded finance APIs, platforms can offer enterprise-grade payment capabilities while maintaining focus on their core differentiation.
As open banking payments grow from $4 billion to $116 billion globally, early movers will capture disproportionate value. The combination of dramatic cost reduction, instant settlement, and near-zero fraud creates compelling advantages for platforms and their users. Multi-rail architecture ensures comprehensive coverage while maintaining the flexibility to adapt as the ecosystem evolves.
The question isn't whether to implement open banking, but how quickly platforms can offer these advantages before competitors recognize the opportunity.
