Open Banking in iGaming: lower fees and fewer chargebacks, but not a replacement for cards

Open Banking is being sold to iGaming operators as the thing that will end chargebacks, cut processing costs to zero, and make KYC instant. The mechanics are real enough, but the source text makes the basic point that matters to PSPs: it solves part of the payment problem and creates a few new ones.

1. Open Banking does improve some core payment economics for casino and sportsbook merchants. A direct bank transfer is harder to dispute than a card payment, frozen reserves can disappear, and fees are lower. On paper that looks like the clean fix operators have been waiting for.
2. The catch is conversion. Cards are familiar; Open Banking usually adds a step where the player has to open a banking app and authorize an unfamiliar payment. Some players, including paying customers, will not complete that flow, so conversion drops.
3. Coverage is incomplete. The source text says not every European bank properly supports the Open Banking standard, and in some markets 30–40% of players simply will not be able to pay this way. For PSPs, that is not a small edge case; it is a routing and acceptance problem.
4. Regulatory requirements do not go away just because the payment rail changes. The German regulator and the Maltese regulator have not, according to the source, removed verification requirements after the arrival of Open Banking; they have simply added Open Banking on top of existing controls.
5. The wider point is familiar: iGaming keeps getting sold a new payment rail as if it were a substitute for the entire stack. The source compares this to the old promises made about crypto deposits in 2021, instant payments in 2019, and e-wallets in 2017. The result, in practice, is usually a partial fix rather than a clean replacement.

For high-risk operators and their payment partners, the decision is not whether Open Banking works. It does. The real question is where it improves acceptance economics enough to justify lower coverage, lower familiarity, and unchanged compliance friction.