Payment initiation under open banking works like this: the client authorises a payment inside their own banking app, the bank moves the funds directly to your account, and you receive a credit transfer. There is no card, no acquirer, no authorisation hold and no scheme in the middle. That is exactly why the fee is a fraction of card cost and why the fraud profile is so much better, since the client authenticated in their own bank.
It is also why there is nothing to reverse. A completed credit transfer is a settled payment. The scheme rules that let a cardholder claim their money back through an acquirer have no equivalent here. If you need to return funds, you have to send a new payment in the opposite direction, and that turns a refund into a payout with everything a payout involves.
What actually happens when you refund one
The return leg is an outbound transfer from your account to the client's. That means you need the client's account details, and you need confidence they belong to the same person who paid. Some banks and payment providers return the payer's IBAN and name in the payment data, which solves the problem cleanly. Others return a masked reference, or a name that does not match the client's profile because the account is joint or held under a maiden name.
Every one of those cases becomes a manual check. Refunding to an account you cannot verify is how firms end up sending client money to a third party, which is both an AML failure and a permanent argument. The safer default is to only return funds to the account the deposit came from, and to treat any request to send elsewhere as a payout requiring the full source of funds and identity process.
Never refund an open banking deposit to a card, an e-wallet or a crypto address because the client asked. Returning funds by a different rail from the one that funded the account is a classic layering pattern, and it is one of the first things an auditor looks for.
The timing gap nobody warns clients about
Deposits arrive in seconds on instant rails. Returns often do not. If your outbound payments run in a batch, or through a treasury account at a different bank, or through a provider that settles on a schedule, the client experiences a payment that took four seconds to leave and three days to come back. They will describe that as the money being held, and on the second day they will contact their bank.
The fix is not speed alone, it is a stated timeline that you meet. Tell the client at the moment of the refund request when the funds will arrive and by which route, and confirm again when the transfer is sent with a reference they can quote to their bank. The same discipline applies to any withdrawal, and the operational side is covered in settlement delays and payout rails compared.
Disputes without a dispute process
Card payments come with an adjudication system. Open banking does not. When a client claims they did not authorise a payment they made inside their own banking app, there is no arbitration body sitting between you. The bank may investigate under its own fraud rules, and in some markets an ombudsman scheme can look at the case, but there is no equivalent of the chargeback with its evidence deadlines and defined outcomes.
That is mostly good news for the merchant. It also removes the safety net that a card dispute gives the customer, and consumer bodies have noticed. Firms taking open banking deposits should assume the scrutiny will land on their own complaint handling instead: a written process, a response deadline, and a record of what was decided and why. The comparison with card behaviour is set out in chargebacks explained.
Reconciliation is where it usually breaks
A credit transfer carries a reference field and not much else. If the client edits it, or their bank truncates it, or two clients pay from the same family account, matching the payment to the right trading account stops being automatic. Firms that treat open banking as free money and skip the matching layer discover this at the exact moment they need to prove which deposit funded which balance.
Build the deposit initiation so your reference is generated per transaction and passed through the provider rather than typed by the client. Store the payer IBAN and name against the account from the first successful deposit and match every later one against it. Flag mismatches for review rather than crediting them. This is dull work, and it is the difference between a refund taking two minutes and taking a compliance review. The broader picture sits in open banking payments and, for firms running several providers, multi PSP strategy.
Partial refunds and the currency problem
Partial returns are the common case in trading: a client deposits, trades, and asks for the remaining balance back rather than the original sum. That is a withdrawal, not a refund, and should be processed as one with the usual checks. Calling it a refund in your ledger because it happens to go back to the funding account creates a reporting mess later.
Currency adds another edge. If the deposit arrived in euros and was converted into a dollar account balance, returning the original euro amount means eating the conversion difference in both directions. Decide the policy in advance and publish it: either you return the original currency amount and absorb the movement, or you return the converted balance at the current rate. Both are defensible. Silence is not, and it turns into a complaint about hidden charges. Our note on currency conversion fees covers where those spreads sit.
Is it worth it
For a firm taking deposits in markets where open banking coverage is strong, yes. The cost per transaction is far below card, approval rates are high because the client authenticates at their own bank, and the fraud and dispute exposure is smaller. What you are buying with that saving is an obligation to build the return leg properly: verified payer details, a stated timeline, matched references, and a complaint process that stands in for the one the card schemes used to provide.
Firms that plan this before launch handle refunds as a normal payout queue. Firms that do not spend their first busy month deciding each case by hand.
"Card rails give you a refund button you did not have to build. Open banking gives you a lower fee and a project. Both are fine, as long as you priced the project."
— Roman Onta, Executive Director, SINGUARD
Key Takeaways
- An open banking deposit is a settled credit transfer, so a refund is a new outbound payment rather than a reversal.
- Return funds only to the verified account that sent them, never to a card, wallet or crypto address instead.
- State a refund timeline at the request and confirm with a reference when the transfer is sent.
- Generate the payment reference per transaction and store the payer details, or reconciliation and refunds both become manual.
Frequently Asked Questions
Can an open banking payment be reversed?
Not in the way a card payment can. The transfer settles at the bank, so returning money means initiating a separate payment back to the payer. There is no scheme level reversal mechanism.
How long does an open banking refund take?
It depends on your outbound rail rather than the inbound one. Instant schemes can return funds in minutes, batched or cross-bank transfers take longer. Give the client a stated timeline at the point of request.
Are there chargebacks with open banking?
No card style chargeback exists. A client can raise a fraud claim with their bank or, in some markets, take a complaint to an ombudsman scheme, so a documented internal complaints process matters more than it does on card rails.
About the Author
Roman Onta is an Executive Director at SINGUARD. He builds the Prop Firm CRM, the Broker CRM, Scalegram and CopySignals side by side with his brother Alex Onta, and he helped on the design of eTrader, the division Alex built and leads. His ground is worldwide payment processing, AML compliance and the corporate structures brokers are built on, work the two of them carry together, shaped by executive roles in the UAE and international corporates. He lives and works in Dubai for most of the year. Meet the executive duo leading Singuard's five divisions.