Patrick McKenzie wrote a fascinating deep dive on Open Banking and payments competition. The TL;DR: The fight over Open Banking isn't about data access, it's about payments. Banks earn a lot from card payments, but little from the bank-to-bank transfers that Open Banking enables.
Chase announced fees for Open Banking access that could cost fintechs 60-100% of their annual revenue. This isn't accidental pricing -- it's designed to kill "pay by bank" alternatives.
Why now?
Open Banking rules were finalized in 2024, banks then sued to block them, and while the CFPB initially fought back, a now-gutted CFPB just recently dropped the lawsuit in a de facto win for banks.
Ironically, the crypto/fintech folks who wanted a gutted CFPB are now feeling the pain of reduced oversight.
What's in it for banks?
Pure economics. ACH debits cost about 1.85 hundredths of a cent per transaction vs. credit card fees of 1-2%+ of transaction value. That's a massive revenue threat.
Who does this affect?
Open Banking enables account-to-account payments across the fintech ecosystem:
- Crypto/investing: Instantly connecting bank accounts to Coinbase, Robinhood, Gemini instead of waiting days for micro-deposits
- Payroll: Seamless account linking for services like Rippling and Gusto
- E-commerce: Direct bank payments through Stripe Link and Shopify (Stripe reports Link bank accounts tripled in the last year)
- P2P transfers: Instant transfers on Venmo without card fees
To make this work, fintechs need to verify account ownership and initiate low-cost ACH debits. If they have to pay Chase's proposed fees, the economics break completely.
The crypto angle
Traditional pay-by-bank has two requirements: verify the user owns the account and check the balance. Both require asking the bank.
But with crypto wallets? Ownership verification is trivial (sign a transaction) and balance verification is public on the blockchain. You get all the benefits of pay-by-bank without depending on banks for data access.
This explains why Stripe is betting big on stablecoins -- it's "pay by bank without the bank" and without the gatekeeping fees.
Bottom line
We're watching the next battleground in financial infrastructure. Banks want to preserve their card business; crypto and fintechs are building alternatives that route around traditional rails entirely.
The question: Will innovation find a way around banking gatekeepers, or will weakened regulators let incumbents stifle competition through pricing?