Open Banking in Germany: How It Works for Business

Germany ranks second in Europe for open banking maturity — and the gap with first place narrows each year. Businesses that process payments in the German market now operate within one of the most structured, API-driven financial ecosystems on the continent. Open banking in Germany combines strict regulatory oversight with robust technical standards, creating conditions where payment service providers, ecommerce platforms, and high-risk merchants gain reliable, card-free access to 80% of the banked population. TODA Pay connects businesses directly to this infrastructure.

What German Open Banking Regulation Requires Today

Open banking in Germany operates under a dual regulatory framework. The EU’s Payment Services Directive 2 (PSD2), transposed into German law through the Zahlungsdiensteaufsichtsgesetz (ZAG), mandates that banks grant licensed third-party providers API access to payment accounts. BaFin — the Federal Financial Supervisory Authority — supervises every provider that operates under this framework, enforcing licensing, data protection, and operational standards.

Businesses entering the German market must account for these requirements:

• PSD2 / ZAG compliance: Any provider initiating payments or accessing account data requires a BaFin licence as a payment institution or must operate through a licensed TPP partner
• Strong Customer Authentication (SCA): Every transaction requires a minimum of two authentication factors — a standard that protects both the business and the end customer
• Consent-driven data access: Account data transfers proceed only with explicit, revocable customer consent — a non-negotiable condition under German law
• FiDA and PSD3 transition: Draft legislation currently in negotiation expands the framework toward open finance, covering insurance and investment data, with full implementation expected around 2027

This regulatory architecture positions Germany as a predictable, high-trust environment — one where BaFin oversight functions as a commercial credential rather than a barrier.

Germany Open Banking Market Size and Growth Data

The German open banking market generated over $2 billion USD in revenue in 2024. Grand View Research projects that figure to reach approximately $9 billion USD by 2030 — a compound annual growth rate (CAGR) of 26.5%. Germany accounts for 7.1% of global open banking revenue, ranking second in Europe behind the UK.

Consumer behaviour accelerates this growth. Bank transfers already account for approximately 50% of German online purchases. With giropay discontinued in December 2024 and Wero — the EPI-backed instant A2A wallet — reaching 14 million users within four months of launch, the market actively consolidates around account-to-account payment rails.

How the Open Banking API Standard Works in Germany

Germany’s technical foundation for open banking API integration centres on the NextGenPSD2 standard, developed by The Berlin Group — a consortium of over 26 European banks and payment institutions. This standard implements the XS2A (Access to Account) requirement of PSD2 in a structured, interoperable format that functions across German and European banking infrastructure.

The key components of Germany’s API ecosystem include:

• NextGenPSD2: The dominant API specification for both Payment Initiation Services (PIS) and Account Information Services (AIS) — adopted across the majority of Germany’s 1,200+ banks
• giroAPI: The German Banking Industry Committee (GBIC) unified interface that standardises third-party access to payment initiation and account data across major German banking groups
• SEPA Instant / SCT Inst: As of January 2025, banks and PSPs across the Eurozone must receive SEPA Instant payments at no additional cost — with outbound parity mandated for October 2025
• SCA via 2FA: Every API-initiated transaction executes through two-factor authentication, with BaFin-aligned exemptions now extended to 180-day re-authentication windows

These standards eliminate the fragmentation that characterised Germany’s early open banking rollout. Businesses integrating through a compliant API aggregator gain consistent, auditable connectivity across the German banking network.

Open Banking Use Cases That Drive Business Revenue

The commercial case for open banking in Germany extends well beyond standard ecommerce checkout. Germany’s combination of high banking penetration, low credit card adoption, and 50% online payment share via bank transfer creates specific monetisation conditions that card-based PSPs cannot replicate.

Businesses apply German open banking infrastructure across four high-value scenarios:

• eCommerce checkout via Pay by Bank: Customers authenticate directly through their bank, triggering an instant SEPA transfer at point of sale — cutting card processing fees and chargeback exposure simultaneously
• iGaming and broker payouts: Instant A2A transfers via open banking deliver winnings and investment proceeds directly to verified bank accounts, meeting AML and KYC requirements without card network intermediaries
• B2B invoice and import payments: Cross-border businesses and importers use open banking rails to initiate euro-denominated payments with full transaction data, automating reconciliation against issued invoices
• High-risk merchant processing: Merchants operating in sectors where card acquirers impose restrictions — adult content, nutraceuticals, firearms accessories — access compliant euro payment processing through BaFin-licensed TPPs without card scheme dependency

Each scenario replaces a high-friction, high-cost traditional payment method with a consent-driven, regulated bank-to-bank transfer. For high-risk merchants specifically, this distinction determines whether euro payment acceptance is possible at all.

Connect Your Business to German Open Banking Now

Processing payments in Germany through open banking infrastructure requires a partner with BaFin-aligned licencing, NextGenPSD2 connectivity, and experience across both standard and high-risk merchant categories. TODA Pay provides exactly this — a single integration point that delivers compliant payment initiation and account data access across the German banking network, with coverage extending to SME, enterprise, and high-risk business models that traditional processors decline.

The onboarding process maps directly to PSD2 and ZAG requirements, removing the compliance burden from the merchant side. For businesses ready to access Germany’s €8.6 billion open banking market, TODA Pay activates that connection — compliantly, reliably, and without card network dependency.

Frequently Asked Questions

What is open banking in Germany?

Open banking in Germany gives BaFin-licensed third parties API access to bank accounts under PSD2 and the German ZAG payment supervision act. Businesses use this access to initiate payments, retrieve account data, and automate financial workflows with full customer consent.

Is open banking in Germany safe for businesses?

BaFin supervises all open banking providers in Germany, mandating Strong Customer Authentication and encrypted data transfers for every transaction. These standards make Germany one of the most secure open banking environments in Europe for business payment operations.

Which API standard do German banks use for open banking?

German banks predominantly implement the NextGenPSD2 standard developed by The Berlin Group, covering both payment initiation and account information access. The GBIC’s giroAPI adds a unified interface for third-party access across major German banking institutions.

What are the main use cases of open banking for businesses in Germany?

Businesses in Germany apply open banking to ecommerce checkout, iGaming payouts, B2B invoice payments, automated credit checks, and real-time liquidity management. High-risk merchants benefit particularly from direct bank transfers that bypass card network restrictions and reduce fraud exposure.

How does PSD2 affect high-risk merchants operating in Germany?

PSD2 requires high-risk merchants to work with BaFin-licensed payment institutions or authorised TPPs to initiate payments and access account data legally. Open banking in Germany under PSD2 gives high-risk businesses a compliant, card-free payment rail that traditional card processors routinely deny them.