How open banking is changing merchant cash advances
By Helm, Funding Specialist
- Open banking lets MCA providers access your transaction data securely
- This speeds up applications and can improve approval rates
- Your data is shared with your explicit consent and is fully encrypted
- Open banking can help providers offer more accurate, personalised funding
- Businesses with strong revenue but limited card data may benefit most
Open banking has been one of the most significant developments in UK financial services in recent years. For merchant cash advance providers, it offers a way to assess businesses more accurately and process applications faster than ever before.
This guide explains what open banking is, how it works in the context of MCAs, and what it means for your business.
What is open banking?
Open banking is a system that allows third-party financial providers to access your bank account data securely, with your permission. It was introduced in the UK in 2018 and is regulated by the Financial Conduct Authority.
When you consent to open banking, a provider can see your transaction history, income patterns, and spending, all through a secure, read-only connection. They cannot move money or make changes to your account.
How MCA providers use open banking
Traditionally, MCA providers assessed businesses based on card terminal data, which they would request from your payment processor. This could take time and only showed part of the picture.
With open banking, providers can access a much fuller view of your business finances in minutes rather than days.
- See your total revenue, not just card transactions
- Assess your cash flow patterns and seasonal trends
- Verify your business income without requesting bank statements
- Make faster, more accurate funding decisions
- Identify the right advance amount based on your full financial picture
Benefits for your business
Open banking creates several advantages for businesses applying for a merchant cash advance.
- Faster applications: no need to gather and send bank statements manually
- Better funding offers: providers can see your full revenue and offer more accurate amounts
- Higher approval rates: businesses that might be declined based on card data alone may be approved when full revenue is considered
- Less paperwork: the process is largely automated through secure data sharing
- Fairer assessment: providers can see the real health of your business, not just one data point
Is open banking safe?
Yes. Open banking is regulated by the FCA and uses bank-level encryption. You must give explicit consent before any data is shared, and you can revoke that consent at any time.
Providers can only read your data. They cannot make payments, transfer money, or modify your account in any way. The connection is read-only and time-limited.
Open banking vs traditional MCA application
Here is how the application process compares with and without open banking.
| Step | Traditional Application | With Open Banking |
|---|---|---|
| Providing financial data | Send 3 to 6 months of bank statements | Instant secure data connection |
| Time to assess | 1 to 3 business days | Minutes |
| Data accuracy | Depends on documents provided | Real-time verified data |
| Revenue assessment | Card transactions only | Full business revenue |
| Paperwork required | Moderate to high | Minimal |
What this means for the future
As open banking adoption grows, MCA applications will become even faster and more accessible. Businesses that previously could not qualify because they did not process enough card payments may find that their overall revenue qualifies them through open banking assessment.
For the MCA industry as a whole, open banking is driving better risk assessment, more competitive pricing, and a smoother experience for business owners.
Frequently asked questions
Do I have to use open banking to get an MCA?
No. Most providers still accept traditional applications with bank statements and card processing data. Open banking is an optional route that speeds up the process.
Can I revoke open banking access after my application?
Yes. You can revoke access at any time through your bank's app or online banking. The provider will no longer be able to see your data.
Will open banking show my personal spending?
Open banking for MCA applications typically connects to your business bank account only. Your personal accounts are not shared unless you specifically consent to it.
Does open banking improve my chances of approval?
It can. By giving the provider a fuller picture of your business finances, open banking may reveal strengths that card data alone does not show, potentially improving your chances.