The ROI of Open Banking: A CFO’s Perspective

Introduction: Payments as a Strategic Lever for EBITDA

To the average CFO, payment processing costs are often relegated to a fixed line item in SG&A—a utility bill that scales linearly with revenue. This is a fundamental strategic error. In the high-risk and iGaming sectors, where card acceptance fees frequently exceed 3.5%, these costs are not merely operational expenses; they are a direct tax on your EBITDA margin. When your net profit hovers around 15%, surrendering 300 basis points to the card schemes is mathematically indefensible.

The shift from legacy card rails to Open Banking infrastructure represents one of the few remaining efficiency arbitrages available to the modern enterprise. By bypassing the interchange-heavy card networks in favor of flat-fee or low-cost SEPA rails, merchants can reclaim 100 to 200 basis points of top-line revenue. This article provides a rigorous financial analysis of the ROI of open banking, dissecting the efficiency gains across three critical dimensions: fee compression, liquidity velocity, and the elimination of fraud OpEx. For a broader understanding of the infrastructure driving these savings, read The Complete Guide to Open Banking for European Businesses.

Dimension 1: Direct Fee Reduction (The P&L Impact)

To the CFO, the “Interchange++” pricing model is effectively a tax on revenue. In the high-risk sector, this stack is particularly punitive. While EU consumer card interchange is capped at 0.20-0.30%, high-variance merchants frequently process significant volumes of commercial cards and non-EEA traffic. For these transactions, the cap does not apply. The interchange alone can hit 1.50% to 2.00%, and once you layer on scheme fees (Visa/Mastercard assessment) and the acquirer’s risk markup, your effective merchant discount rate (MDR) often exceeds 300 basis points.

This is the “rent” you pay for accessing the card networks—a fee structure built on legacy infrastructure. ROI of open banking strategies focus on evicting this landlord. Because Open Banking utilizes Account-to-Account (A2A) rails, it bypasses the card schemes entirely. There is no interchange and no scheme fee. You are left with a lean fee structure—often a flat fee per transaction or a significantly reduced percentage (typically 50–80 bps depending on volume).

The math is linear and brutal. On €10 million in annual turnover, a 200-basis-point reduction translates directly to €200,000 in pure profit added to the bottom line. This is not a theoretical efficiency; it is a hard cost elimination. For a granular breakdown of these hidden costs, consult A CFO’s Guide to Understanding High-Risk Payment Gateway Fees or review the macro-trends in the McKinsey Global Banking Review.

Dimension 2: Liquidity and Working Capital (The Balance Sheet)

For the modern Treasurer, the hidden friction of card acceptance lies in the float. In high-risk verticals, acquirers typically mitigate their exposure by enforcing T+7 settlement cycles, often compounded by rolling reserves that lock up 5% to 10% of turnover for 180 days. This archaic practice traps your working capital, artificially inflating your days sales outstanding and forcing reliance on costly revolving credit facilities to bridge the gap.

Open Banking radically accelerates this velocity. By leveraging SEPA Instant rails, funds move from the customer’s account to your ledger in seconds, effectively compressing the Cash Conversion Cycle (CCC) to zero. This transition to instant settlement means you are no longer financing the acquirer’s risk appetite; you are capitalizing your own growth. Consider the math: on a €50M portfolio, a 10% rolling reserve locks €5M in dead capital. Reclaiming that liquidity is equivalent to a massive injection of equity without the dilution.

The strategic implication is clear: you improve cash flow not by selling more, but by accessing your revenue faster. When you factor the opportunity cost of trapped liquidity against the immediate availability of Open Banking funds, the impact on the balance sheet is just as significant as the fee reduction on the P&L. This liquidity velocity is a critical, often unmeasured component of the ROI of open banking.

Dimension 3: Eliminating the “Hidden” OpEx of Fraud

Most financial models critically understate the cost of fraud, isolating it as a simple deduction of lost revenue. This is a dangerous oversimplification. Industry analysis suggests that for every euro of fraud lost, the true cost to the merchant approaches €3.00 when factoring in the administrative burden. The first layer of this expense is the punitive chargeback fees levied by acquirers—often ranging from €25 to €50 per instance—which are payable even if you successfully defend the dispute.

However, the more insidious drain is the fraud operational costs buried in your SG&A. This encompasses the salaries of risk analysts dedicated to manual review, the legal overhead of dispute arbitration, and the licensing fees for expensive third-party scoring engines like Sift or Kount. In a high-risk card portfolio, these costs are mandatory defensive moats.

Open Banking renders this entire infrastructure largely redundant. Because transactions are authenticated via bank-grade biometrics (SCA) and settled on irrevocable SEPA rails, the mechanism for “friendly fraud” is structurally eliminated. There is no dispute process for a buyer to exploit. Consequently, the ROI of open banking is not just found in the fees you save, but in the overhead you no longer need to fund. You can effectively zero out the budget for dispute resolution and reallocate that human capital toward revenue-generating activities.

Dimension 4: Reconciliation and Automation

For the Financial Controller, the most tedious friction in the payment cycle is the month-end close. Traditional card acquirers deposit funds in opaque net batches, often commingling gross sales with unpredictable deductions for interchange, scheme fees, and rolling reserves. Your team is left to manually unwind these lump sums against thousands of individual order IDs, refunds, and disputes. This “detective work” is error-prone and consumes disproportionate man-hours, acting as a silent drag on finance team efficiency.

 

Open Banking solves this data asymmetry at the root. Because every transaction carries a unique, immutable reference passed directly through the API to the bank statement, reconciliation becomes deterministic rather than probabilistic. The data payload travels with the money. This allows for fully automated reconciliation, where your ERP can match 100% of inbound liquidity to specific customer invoices in real-time, without human intervention. By removing the manual labor of deciphering complex settlement reports, you effectively reduce the headcount requirement for your accounts receivable function. This operational streamlining is the final, often overlooked component contributing to the total ROI of open banking, converting the finance function from data entry to strategic analysis.

Conclusion: The Business Case is Undeniable

The financial verdict is absolute. Integrating Open Banking is no longer merely a technical upgrade for the IT department; it is a core mandate of strategic financial planning. By simultaneously compressing processing fees, accelerating liquidity to real-time, and excising the operational tumor of fraud management, you achieve a trifecta of efficiency that legacy card rails simply cannot match. This is not marginal optimization; it is structural bottom line growth.

The ROI of open banking is measurable, immediate, and substantial. Every day you remain tethered to the “Interchange++” model is a day you voluntarily surrender margin to the schemes. Do not leave these basis points on the table. Partner with Sola today to request a customized economic model and visualize exactly how this infrastructure translates to your specific P&L.