The Game Dev’s Guide To Open Banking In The EU
October 11, 2021• min
Whether you’re a big game studio, a solo developer, or somewhere in-between, you’ll want to keep up with quickly evolving changes in the payments landscape to make sure that you’re in the best position to grow your game — and one of the biggest new changes is open banking.
In this article, we’ll provide you with an overview of open banking and the factors that are driving this revolutionary shift, share the past milestones and present state of open banking’s rollout in the EU, and explain what it all means for your game.
What is open banking?
Open banking is a new approach to banking that enables qualified third parties in the EU to securely access consumer account and transaction data across financial institutions. With this access, companies can create new tools and services that give consumers a broader view of their finances and inform them about emerging financial products that can help them to achieve their goals, enabling greater competition in the EU marketplace.
Merchants can also use open banking data to better understand their audience’s buying habits, which helps them to segment their audience more accurately, create more targeted marketing campaigns, and more effectively identify and prevent fraud.
Changing the payments landscape
For game developers, open banking makes it possible to
It might be tempting to equate the number of fintech companies in a given country to that country’s readiness for open banking, but that’s not always the case. Also, some countries that have invested in banking innovation but aren’t leading the way in API implementation may be seeking to benefit from the experience of banks and fintech companies in other countries or awaiting more streamlined guidelines.
As more banks ready their APIs, more companies will take the initiative to become licensed TPPs, and their numbers are already growing. Today, more than 200 companies have registered as TPPs, including familiar names like Google, Skrill, Stripe, and Worldpay.
What open banking means for your game
Based on an analysis of Xsolla’s extensive video game transaction data, bank transfers account for a significant share of video game transactions in the EU. As popular digital wallets like PayPal rely on banks as the source of funds, users may be interested in bank transfers as an alternative payment method due to its similarity to PayPal but with fewer steps.
While the market share for bank transfers varies among EU member countries, they’re consistently popular across the region. In the Netherlands, bank transfers account for 75% of video game transactions, eclipsing all other payment method types combined. It’s also worth noting that a sizable share of video game payments rely on bank transfers in Poland and Germany, 44% and 25% respectively.
Becoming a third-party provider
Earlier we touched on the primary benefits of open banking for game developers — reduced risk of fraud, completing purchases instantly, saving on credit card and other “middleman” fees — but becoming an authorized third-party provider is not a simple task. You’ll need to:
If you find the right payments partner, you’ll also benefit from other advantages such as keeping up with and implementing new payment methods, off-loading time-consuming administrative tasks like taxes, and ensuring compliance with regulations like GDPR, AMLD, and others.
Next steps
Open banking is a big part of a massive transformation, one that will bring about new tools, services, and business models, empower consumers, and present challenges to those who don’t know how to adapt. It’s an ongoing learning process too, as more financial institutions will advance toward compliance and emerge as authorized TPPs.
As your trusted partner, Xsolla can handle all of the requirements that we’ve covered, plus track and share essential information so you can stay on top of open banking trends and regulations without sacrificing the quality and growth of your game business.
If you’re not an Xsolla partner, contact us at business@xsolla.com to learn about how we can help you begin enjoying the benefits of open banking payments in the EU.
If you’re currently an Xsolla partner, email your account manager and set up a time to discuss how we can help you take full advantage of this rapidly growing payments trend.
- initiate payments directly from user bank accounts, cutting out payments “middlemen” and thereby reducing the amount of revenue lost to fees
- speed up transactions, as direct bank connections enable them to be completed instantly
- increase conversion rates by providing users with new, easy ways to make purchases
- knowledge (something only the user knows)
- possession (something only the user possesses)
- inherence (something the user is, for example, fingerprint, voice recognition)
- An Account Information Service Provider (AISP) can access bank account information like transaction history and credit card details.
- A Payment Initiation Service Provider (PISP) can initiate payments with any of the banks connected via an open API protocol.
- A Payment Instrument Issuing Service Provider (PIISP) checks the funds’ availability for a card-based transaction.
It might be tempting to equate the number of fintech companies in a given country to that country’s readiness for open banking, but that’s not always the case. Also, some countries that have invested in banking innovation but aren’t leading the way in API implementation may be seeking to benefit from the experience of banks and fintech companies in other countries or awaiting more streamlined guidelines.
As more banks ready their APIs, more companies will take the initiative to become licensed TPPs, and their numbers are already growing. Today, more than 200 companies have registered as TPPs, including familiar names like Google, Skrill, Stripe, and Worldpay.
What open banking means for your game
Based on an analysis of Xsolla’s extensive video game transaction data, bank transfers account for a significant share of video game transactions in the EU. As popular digital wallets like PayPal rely on banks as the source of funds, users may be interested in bank transfers as an alternative payment method due to its similarity to PayPal but with fewer steps.
While the market share for bank transfers varies among EU member countries, they’re consistently popular across the region. In the Netherlands, bank transfers account for 75% of video game transactions, eclipsing all other payment method types combined. It’s also worth noting that a sizable share of video game payments rely on bank transfers in Poland and Germany, 44% and 25% respectively.
Becoming a third-party provider
Earlier we touched on the primary benefits of open banking for game developers — reduced risk of fraud, completing purchases instantly, saving on credit card and other “middleman” fees — but becoming an authorized third-party provider is not a simple task. You’ll need to:
- Acquire a license to access open banking APIs, which can take up to nine months, during which you’ll have to demonstrate your ability to adhere to strict security requirements
- Prove that you have a minimum of €50,000 in capital
- Meet EU business license requirements such as holding professional indemnity insurance (PII) and complying with regulations like the General Data Protection Regulation (GDPR), the Electronic Identification, Authentication, and trust Services (eIDAS), and the Anti-Money Laundering Directive (AMLD)
- Integrate with open banking APIs for thousands of banks, which can take a lot of time and effort as they’re not standard and the quality of documentation varies
- Bear responsibility for legal risk, as touching highly sensitive consumer data with no “middleman” means that any reconciliation or integration issues are yours to deal with
If you find the right payments partner, you’ll also benefit from other advantages such as keeping up with and implementing new payment methods, off-loading time-consuming administrative tasks like taxes, and ensuring compliance with regulations like GDPR, AMLD, and others.
Next steps
Open banking is a big part of a massive transformation, one that will bring about new tools, services, and business models, empower consumers, and present challenges to those who don’t know how to adapt. It’s an ongoing learning process too, as more financial institutions will advance toward compliance and emerge as authorized TPPs.
As your trusted partner, Xsolla can handle all of the requirements that we’ve covered, plus track and share essential information so you can stay on top of open banking trends and regulations without sacrificing the quality and growth of your game business.
If you’re not an Xsolla partner, contact us at business@xsolla.com to learn about how we can help you begin enjoying the benefits of open banking payments in the EU.
If you’re currently an Xsolla partner, email your account manager and set up a time to discuss how we can help you take full advantage of this rapidly growing payments trend.
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