Pay by bank is a way of paying a shop or a bill straight from your bank account instead of with a card. The money moves from the payer’s account to the merchant’s account over the country’s bank transfer system, usually in seconds. People in the industry also call it account-to-account, or A2A, payments.

How a pay by bank payment works

At an online checkout, the customer picks their bank. A licensed payment initiation provider sends them to their own banking app with the amount and the payee already filled in. The customer approves the payment there, with the same face scan or passcode they use to log in, and the bank sends the money over an instant payment system such as Faster Payments in the UK or SEPA Instant in the euro area. The merchant usually knows within seconds that the money has arrived.

No card number changes hands, and no card network sits in the middle. That is the main difference from paying by card, and it explains both why merchants like pay by bank and why consumers have been slower to take to it.

The same rails can handle repeat payments. Variable recurring payments, or VRPs, let a customer give a company standing permission to take payments within limits they set, such as a maximum amount per month. In the UK they have so far been required only for sweeping, moving money between a person’s own accounts.

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Why merchants want it

Cards come with interchange and scheme fees on every transaction, and the merchant can wait days for the money. A bank payment usually costs less and settles almost at once. It also cannot be taken back through a chargeback, which protects merchants from the disputes and so-called friendly fraud that come with cards.

That last point is the trade-off for shoppers. A card payment comes with a dispute process and, in the UK, protection under Section 75 of the Consumer Credit Act for credit card purchases. A bank payment does not carry the same rights, so what protection a shopper gets depends on the scheme and the country.

How pay by bank works around the world

United Kingdom

The UK built pay by bank on open banking, which the Competition and Markets Authority required of the nine largest banks from 2018. By July 2026 more than one billion open banking payments had gone through those banks. In June 2026 there were 40.16 million in a month, of which 7.73 million were VRPs, according to Open Banking Limited. In June 2026 the FCA welcomed the launch of the UK Payments Initiative, an industry scheme for commercial VRPs that would let people pay bills and subscriptions this way.

European Union

The EU’s Instant Payments Regulation made instant euro transfers standard. Banks in the euro area had to be able to receive them by 9 January 2025 and send them by 9 October 2025, at no higher price than an ordinary transfer, with a free check that the payee’s name matches the account. Wero, the wallet built by the bank-backed European Payments Initiative, runs on those rails. In September 2026 bunq said it was the first bank to offer Wero for both transfers and online purchases in all four of the wallet’s launch markets (our report).

India and Brazil

The largest account-to-account systems are run by central banks or bodies close to them. India’s UPI processed a record 24.51 billion transactions in August 2026, Business Standard reported from figures published by the National Payments Corporation of India. Brazil’s central bank launched Pix in November 2020, and it has become one of the most common ways to pay in the country.

United States

The US has two instant payment systems: The Clearing House’s RTP network, launched in 2017, and the Federal Reserve’s FedNow, launched in July 2023. In the first quarter of 2026 RTP carried 128 million payments and FedNow 2.73 million, according to the Richmond Fed. Most of that is business payments and payouts rather than shoppers paying at checkout. The open banking rule that could support consumer pay by bank, the CFPB’s Section 1033 rule, has been blocked by a federal court and is being reconsidered.

Fraud and protection

Because the payer approves every payment themselves, the main fraud risk is scams that trick people into sending money, known as authorised push payment fraud. Since 7 October 2024, UK payment firms have had to reimburse most victims of these scams up to £85,000 per claim, with the cost split between the sending and receiving firms. The EU’s payee name check, in force in the euro area since October 2025, is meant to stop people paying the wrong account. Card networks are moving into the gap too: Visa has built a fraud scoring tool for bank transfers using technology from Featurespace, which it bought (our report).

Questions about pay by bank

Is pay by bank the same as open banking?

Not quite. Open banking is the set of rules and connections that let licensed companies access bank accounts with the customer’s permission. Pay by bank is one use of it, where a company starts a payment from the account. In India and Brazil, pay by bank runs on national systems rather than open banking.

Can I get my money back if something goes wrong?

There is no chargeback as there is with a card. Protection depends on the scheme and the country. In the UK, victims of authorised push payment scams can usually claim reimbursement. For a purchase that goes wrong, the first route is the merchant’s own refund policy.

What is a variable recurring payment?

A standing permission for a company to take payments from your bank account within limits you set, such as a maximum amount each month. You can cancel it from your banking app. It works like a Direct Debit, with more control for the payer.

Is pay by bank cheaper for merchants?

Usually. There is no interchange or card scheme fee, and the money arrives almost at once. The merchant still pays the payment provider that runs the checkout.

Why is pay by bank less common in the US?

US consumers are used to cards and their rewards, and the US has no national open banking scheme in force. The two instant payment systems are mostly used for business payments for now.