In today’s fast-changing payments ecosystem, new solutions are emerging that give customers more flexibility, security, and speed. Pay by Bank is a payment method that allows users to pay directly from their bank account without the need for credit cards or third parties. This approach to banking and payments is gaining momentum in the UK, supported by open banking regulations, and offers both retailers and customers a safer, faster way to make payments online.
What is Pay by Bank?
Pay by Bank is a real-time payment method that allows customers to authorise payments directly from their bank account using online banking or a banking app. Instead of entering card details at the checkout page, customers simply select their bank, log into their bank’s mobile app or online banking portal, and approve the payment.
The system uses a single-use payment method that allows each transaction to be securely authorised. Pay by Bank allows customers to pay directly from their bank account with no need to enter sensitive card details, reducing the risk of fraud and simplifying the payment journey.
How Pay by Bank payments work in practice
When a customer chooses the option to pay by bank at checkout, they are redirected to their bank’s portal or mobile app. There, they select their bank account, review the transaction details, and authenticate using biometric verification or login credentials. Once they approve the payment, the bank processes it in real time.
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The customer is then redirected back to the retailer’s checkout page with confirmation. Pay by Bank payments are processed in accordance with UK open banking and PSD2 regulations, ensuring strong customer authentication (SCA) and compliance with European standards.
Advantages of using Pay by Bank for customers
For customers, the main benefits of Pay by Bank are security and convenience. Payments are fast and secure because they come directly from a UK bank account, and there is no need to enter card details or share data with third parties. This reduces the risk of fraud significantly.
Other advantages include:
- Real-time confirmation of transactions.
- No reliance on debit or credit cards.
- Ability to check your bank account immediately for payment updates.
- Lower chance of error compared to entering long card numbers.
The option to pay directly from their bank account is particularly attractive for those who want a simple, card-free experience.
Benefits for merchants and retailers
For merchants, Pay by Bank provides a reliable way to accept payments without depending on credit cards, debit cards, or traditional card networks. Payments are transferred directly from the customer’s bank, reducing processing costs and lowering the risk of disputes or chargebacks.
Retailers also benefit from faster settlement and fewer failed payments. Merchants to accept Pay by Bank payments gain access to a growing audience of UK customers who prefer secure, real-time payments. By integrating providers like Fenige, businesses can expand their payment options while reducing reliance on costly card schemes.
Pay by Bank vs. card payments
Traditional card payments rely on credit or debit cards, card networks, and payment processors like Visa, Mastercard, or Stripe. This process often involves multiple third parties and higher fees. By contrast, Pay by Bank payments move funds directly between the customer’s account and the merchant’s account with fewer intermediaries.
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Instead of using a card, customers authorise the payment through their bank’s mobile app and funds are transferred instantly. For merchants, this reduces costs and streamlines the payment journey, while customers gain peace of mind from enhanced security and transparency.
Security and fraud prevention
One of the strongest arguments for Pay by Bank is its security. Transactions require customers to authenticate and approve the payment via their online banking portal or mobile app, often using biometric verification. Since bank details and card information are not shared, the risk of fraud is significantly lower.
Pay by Bank also minimises the chances of phishing or data breaches because all you need to do is authorise the payment in your bank’s secure environment. This makes it one of the most secure digital payment options currently available in the UK.
Refunds, disputes, and chargebacks
Refunds with Pay by Bank are simple: once a merchant approves a refund, the funds are transferred back to the customer’s bank account within the amount of the original payment. However, unlike card payments, Pay by Bank does not always follow the traditional chargeback process, since no payment card is used.
Instead, disputes are handled directly between the customer, the merchant, and the software provider that facilitates Pay by Bank transactions. The dispute process is transparent, but merchants and customers should be aware that it differs from credit card dispute procedures.
The role of open banking and regulation
Pay by Bank operates under the UK’s open banking framework, introduced by PSD2. This regulation requires banks to provide secure APIs that allow third-party providers to initiate payments and access account data with customer consent. Open banking enables Pay by Bank to function as a fast and secure alternative to card payments.
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For merchants, compliance with PSD2 and open banking ensures that Pay by Bank payments are processed securely and legally. For customers, it provides reassurance that their transaction is handled under strict financial regulations in the UK and Europe.
How businesses can integrate Pay by Bank?
To offer Pay by Bank as a payment method, merchants typically work with a payment service provider or software provider such as Stripe or Fenige. Integration involves adding Pay by Bank to the checkout page, allowing customers to select their bank and complete the payment.
Fenige supports businesses by providing global payment solutions that include Pay by Bank alongside other options like debit and credit cards, bank transfers, and mobile payments. This makes it easier for retailers to offer customers flexibility while maintaining security and compliance.
The future of Pay by Bank payments
Pay by Bank is expected to grow rapidly as more customers and merchants recognise its benefits. With strong backing from UK banks and fintech providers, it is becoming a mainstream alternative to debit and credit cards. The trend towards fast and secure payments without the need to enter card details will continue to shape the payments sphere.
For businesses that want to stay competitive, offering Pay by Bank payments can be a way to attract customers seeking convenience and security. Fenige’s acquiring and payment solutions ensure that merchants can integrate this real-time payment method alongside traditional options, preparing for the future of digital payments.
Pay by Bank is more than just a trend — it’s a secure, efficient, and regulation-backed payment method that benefits both customers and merchants. By allowing users to pay directly from their bank account, it removes friction, reduces fraud, and provides real-time confirmation. For businesses in the UK and beyond, integrating Pay by Bank through a trusted partner like Fenige is a step towards a safer and more flexible payments ecosystem.
