Sepa Request to Pay vs Open Banking:

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In the ever-evolving landscape of modern finance, traditional payment methods are being challenged by innovative technologies and frameworks that promise to simplify transactions, enhance security, and streamline the overall payment experience. Two such groundbreaking concepts that have gained significant traction in recent years are SEPA Request to Pay (RTP) and Open Banking.

SEPA Request to Pay and Open Banking represent pivotal shifts in the way businesses and consumers manage their financial transactions. They have the potential to reshape the entire payments ecosystem, offering unique advantages and capabilities. In this blog article, we will delve into the world of SEPA RTP and Open Banking, exploring their fundamental differences, functionalities, and the impact they have on the financial industry.

We'll dissect the core principles of both SEPA RTP and Open Banking, comparing their key features, and discussing how they are transforming the way we pay, receive, and manage money. By the end of this article, you'll have a clear understanding of the strengths and weaknesses of each approach, enabling you to make informed decisions about which payment solution is best suited to your needs.

So, whether you're a banking representative looking to implement our SRTP solution  or an everyday consumer curious about the future of payments, join us on this journey as we unravel the fascinating world of SEPA Request to Pay and Open Banking.

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SEPA Request to Pay (RTP):

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SEPA RTP, is an infrastructure scheme called Request to Pay developed & published by SEPA (Single Euro Payment Area) designed to facilitate seamless payment requests and responses within the SEPA region, which encompasses 36 European countries.
SRTP could possibly become the “third payment rail”, competing with Visa & Mastercard on which most of the payment innovations stand on now, such as: e-wallets, e-coomerce,  in-store Payments, Payment Apps, Ticket Payments, Tax collection, etc.  

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Here are some of its key features:

• Standardization: SEPA RTP is backed by the European Payments Council (EPC), ensuring a standardized and consistent payment experience across participating countries. This standardization simplifies cross-border transactions and makes it easier for businesses to operate in multiple European markets. The scheme exists and same as SEPA Instant transfer has been developed as a baseline for banks to use.
• Invoice Integration: One of the standout features of SEPA RTP is its ability to integrate with invoices and billing systems. Businesses can send detailed payment requests along with invoices, making it convenient for customers to pay precisely the amount owed with minimal effort.
• Immediate Payment Responses: SEPA RTP enables real-time payment responses, allowing customers to accept, reject, or defer payments instantly. This feature enhances transparency and reduces the risk of errors in the payment process.
• Multiple Payment Features (Programmable Payments): RTP infrastructure can provide multiple payment options that cover most of Pay-tech use cases, such as: Pay Now, Pay in installments, Buy Now / Pay later (classic BNPL), Pay only X% now and Y% later, Reject the Payment, Propose Payment Amount.

Open Banking:

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Open Banking used to be a hot topic starting from 2018. It is supposed to be a “third payment rail” next to Visa & Mastercard,  allowing third-party providers to access financial data and initiate payments on behalf of consumers or businesses with their explicit consent.
Main issue of Open Banking was unfortunately lack of standardization, integration with each bank needs to happen manually - one bank after another. Each bank has its own standards & API (some of it works, some of it doesn’t), therefore Open Banking has been rather limited to a few countries & few banks.

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Here are some of its key features:

• Data Sharing: Open Banking enables secure and controlled sharing of financial data. Customers can grant access to their financial information to third-party providers, such as budgeting apps or Payment, which can then offer personalized financial services.
• Payment Initiation: With Open Banking, third-party providers can initiate payments directly from a customer's bank account. This can streamline payment processes for e-commerce transactions and subscription services, eliminating the need for traditional payment methods like credit cards.
• Innovation Ecosystem: Open Banking fosters innovation by encouraging the development of new financial products and services. This can lead to more competitive and customer-centric offerings, ultimately benefiting consumers and businesses.
• Enhanced Security: Open Banking adheres to robust security protocols, including strong customer authentication, to protect sensitive financial information. The use of APIs (Application Programming Interfaces) ensures secure data transmission and access.

Comparing SEPA RTP and Open Banking:

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While both SEPA RTP and Open Banking offer valuable features to modernize payments, they are built in completely different ways. SEPA RTP has been proposed and supported by the largest European banks and its standardized model of integration with banks makes it realistic to implement (The same as SEPA Instant a few years ago), while Open Banking with its individual integration standards is more difficult, therefore rather Open Banking will at some point either pivot towards SRTP or become a client of Request to Pay technical providers such as ToriiPay.

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