Open banking for travel businesses
A practical guide to open banking in travel — A2A payments, payment initiation (PIS), the cost picture versus cards, reconciliation, and how open-banking fits alongside card and BACS rails for deposits, balances and supplier payouts.
What open banking means for travel businesses.
Open banking is the framework that lets a regulated third party (a payment initiation or account information provider) move money between a customer's bank account and a merchant's account, with the customer authenticating through their banking app. For travel businesses, it is the cheapest customer-payment rail available - if the flow fits the booking. The trick is knowing which flow does.
Two flows that matter today
A2A push payments and PIS (Payment Initiation Service) for authorised customer-to-merchant transfers. Both authenticate inside the customer's banking app and settle in seconds.
A regulated rail
Open banking in the UK runs under PSD2 and the FCA's PISP/AISP regime. Customers authenticate inside their banking app — there is no card data, no 3DS challenge, no chargeback equivalent.
The trade-off
Lower cost and faster settlement on one side; manual refund/dispute paths and no liability shift on the other. The art is knowing where the trade-off is worth taking.
How account-to-account payments fit travel bookings.
A2A payments move money directly between the customer's bank account and the merchant's bank account, authenticated through the customer's banking app. For travel, that lands best on transactions where the customer is already trusted and a 3DS step-up would be friction without benefit.
Use it for high-value balances
Balance collection from a known customer is the perfect A2A use case.
Use it for late-booking payments
When time matters more than card incentives, A2A settles in seconds.
Use it where the customer prefers it
Younger demographics increasingly default to bank-app payments.
Payment initiation — PIS for one-off travel payments.
PIS (Payment Initiation Service) is the open-banking flow for one-off authorised transfers from a customer to a merchant. The customer authenticates in their banking app, confirms the amount and the reference, and the payment is initiated immediately.
Booking-reference at consent time
PIS captures the booking reference at the moment of consent — so when the payment arrives, it is already attached to the booking rather than landing as an unidentified bank-statement line.
Strong customer authentication built in
The bank-app authentication step is the SCA equivalent for open banking. It is built into the rail, so there is no separate step-up risk.
No chargeback path
PIS payments are not reversible the way card payments are. The customer has authorised a specific payment to a specific merchant for a specific reference; there is no equivalent of a chargeback. Refunds and disputes are handled directly with the merchant.
How open-banking refunds and reversals work.
Open banking has no chargeback equivalent and no card-network refund mechanic. That changes how travel businesses handle the customer side of a refund - in some ways it is cleaner, in others it asks the operator to do more.
Refunds are merchant-initiated transfers
Refunding an open-banking payment is a bank transfer back to the customer's account.
No chargeback path - disputes stay merchant-side
Customer disputes are handled merchant-side, with the bank-app authentication record as evidence.
APP fraud reimbursement is a separate framework
Authorised Push Payment fraud rules apply differently to open-banking flows.
The cost picture vs card.
Open banking is the cheapest customer-payment rail you can run. The economics are striking for high-value travel transactions, but the comparison needs to be honest about the operational cost of running multi-rail.
Per-transaction fees
A2A/PIS fees are usually flat (e.g. 20-60p per transaction) versus a percentage MDR on card. For a £4,000 balance, that is a £60+ saving every time.
No surcharge needed
Open-banking transactions sit outside the surcharging ban that applies to consumer cards. You do not need to recover the rail cost from the customer because the cost is materially lower.
Settlement is faster
Faster Payments settle to the merchant within seconds rather than the 2-3 business day card settlement cycle. That improves working capital before considering the cost saving.
How open-banking reconciliation differs from card.
Open-banking payments arrive as Faster Payments bank credits rather than card settlement files. That changes the reconciliation pattern - simpler in some ways, different in others.
Arrivals match the original payment
One open-banking payment = one bank credit, with the booking reference attached.
No interchange or scheme fees
The open-banking arrival is the net amount - no fees deducted on the way through.
One-rail audit picture
Open-banking arrivals, fees and refunds all sit in one rail rather than being split across acquirer, scheme and processor lines.
Compliance, consent and dispute paths.
Open banking is regulated under PSD2 and overseen by the FCA. The consent and dispute model is fundamentally different from card and changes what evidence merchants need to keep.
Consent lives in the bank app
All authorisation happens in the customer's banking app under SCA. Merchants never touch credentials. Consent evidence comes from the PIS/AISP provider, not from the merchant.
No chargebacks
There is no chargeback mechanism in open banking. Customer disputes are handled merchant-side, with the bank-app authentication record as the strongest evidence of authorisation.
APP fraud reimbursement
Under the PSR's APP (Authorised Push Payment) fraud reimbursement rules, banks reimburse customers in some fraud scenarios. Merchants who have followed the right consent flow are not the counterparty - but the framework is worth understanding.
What open banking looks like in felloh.
felloh treats open banking as a first-class payment rail alongside card, payment links and embedded checkout. The booking-level ledger handles A2A, PIS and VRP the same way it handles any other rail.
A2A as a payment-link option
Customers receive a felloh payment link and can choose card or open banking at the point of paying. The booking-level evidence is captured regardless.
Balance collection alongside card
Where customers prefer card for the deposit and open banking for the balance, both flows land against the same booking with the same level of evidence.
One reconciliation picture
Open-banking arrivals match to bookings the same way card settlements do - one booking-level ledger across rails, not separate workflows.
See how this works around your bookings.
Bring one payment, reporting or cash-position problem. We will show how felloh connects the booking-level money trail behind it.
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