What is an open-loop payment system?

An open-loop payment system lets value leave your product on a public rail and arrive in an account you do not issue. Cards, ACH, and UPI are open-loop. A closed-loop system only moves value between wallets you issue. Most products start closed-loop and add an open-loop door for payouts and deposits.

How does an open-loop system work?

The customer’s wallet is still yours. The exit is a rail: an ACH credit to their bank, a card payout, a Pix send. Someone outside your ledger must accept the funds. You now have a partner file to reconcile and a return path to handle.

Open-loop vs closed-loop

Closed-loop is wallet to wallet inside your book. It is fast and cheap and never talks to a bank. Open-loop is how money enters and leaves. If you only ever move between your own wallets, you may not need a rail. The moment you pay out to a bank account, you are open-loop.

What does the ledger add?

Closed-loop posts can apply immediately. Open-loop posts should sit inflight until the rail settles. Mixing the two without a clearing balance hides float and returns.

How it works with Blnk

Closed-loop is a wallet-to-wallet transaction. Open-loop is wallet to a named rail balance, held until the partner confirms.

Keep one internal balance per rail, such as @PayoutUSD_ACH, so returns and files match a pot. See internal balances.