Banks Face Squeeze as Payment Fees Under Pressure from Instant Payments and Open Banking

The traditional model of payment fees is under pressure from several directions as instant payments, open banking, and regulatory scrutiny turn basic money movement into a lower-cost utility.

Banks can survive this squeeze if they stop treating every transaction as a tollbooth and start monetizing the wider financial relationship, but it's no longer just about the fee for moving money from one account to another.

The European Central Bank's Instant Payments Regulation requires instant euro transfers to be priced no higher than corresponding regular credit transfers, and similar regulations are in place in Brazil, India, and the UK.

Brazil's Pix has normalized an instant, widely accessible account-to-account experience for households, while India's UPI has reached extraordinary scale, with 23.2 billion transactions in May 2026 across 720 live banks.