Ask HN: How does open banking payments work?

[thala]

Can someone help me understand how it is different from the traditional schemes like ACH and SEPA? Or is the built on top of these existing rails to make the payment?

From a consumer POV is there a preference for open banking tools like Plaid or Trustly while shopping online?

[ian0]

Typically open banking refers to a Banks provisioning of Oauth style APIs that allow users to share banking permissions with third parties. So a third party provider (eg payment company, budgeting app etc) can grab your statement data and trigger payments on your behalf just like you would from your mobile banking app.

ACH & SEPA are payments rails, which facilitate the interbank transfer of money. So for example, the app you have given permissions to make transfers to will request a transfer through the open banking APIs to your bank, then the bank itself will use the payments rails to process the transfer.