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Pay by Bank: The Future of Payments

Rabea Bader
September 28, 2025
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5 min read
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What is Pay by Bank?

Pay by Bank is a fast and secure way for customers to pay directly from their bank account at checkout. Instead of entering card details, the customer selects their bank, approves the payment in their mobile banking app, and the funds are transferred directly to the merchant.

In the United Kingdom, Pay by Bank is powered by Open Banking and the Faster Payments network. Across Europe, it runs on SEPA/Instant SEPA, and similar systems are now emerging worldwide, including PIX in Brazil, ACH and FedNow in the United States, Multibanco in Portugal and more.

How Pay by Bank Works

  1. Customer selects Pay by Bank at checkout
  2. They choose their bank from a list
  3. They are redirected to their banking app with the payment details pre-filled
    The customer approves the payment using Strong Customer Authentication (SCA) through biometrics or secure login
  4. Funds are transferred directly to the merchant

No card numbers. No intermediaries. No risk of stolen details.

Why Merchants Should Care

For businesses, Pay by Bank is not just another payment option. It is a way to solve some of the biggest challenges in online commerce:

  • Lower fees: no card networks or interchange costs.
  • Instant settlement: funds land in your account usually within seconds, improving cash flow.
  • No fraud or chargebacks: every payment is authenticated by the customer’s own bank.
  • Higher conversion: customers already trust their bank, making them more likely to complete checkout.

‍Pay by Bank vs. Card Payments

Feature
Pay by Bank
Card Payments
Settlement speed
Seconds
2-7 days
Fraud/Chargebacks
None
High
Fees
Low
High
Customer Trust
High (Bank Brand)
Mixed

Payment Rails Behind Pay by Bank Around the World

While the United Kingdom has led adoption, Pay by Bank is expanding rapidly across global markets:

  • United Kingdom: Faster Payments
  • EU: SEPA and SEPA Instant payments.
  • Brazil: PIX is now the dominant payment method.
  • US: ACH, FedNow and RTP 
  • Australia: New Payments Platform (NPP).
  • India: UPI, processing billions of instant transactions each month

Merchants everywhere are embracing Pay by Bank for its lower costs and stronger security. The challenge is that most of these systems are designed for domestic payments, and using them across borders creates real complexity. Providers often face issues with which rail or scheme to use, and in some cases payments are routed incorrectly through rails that a merchant’s bank does not support.

Cross-border payments remain fragmented and expensive. To offer Pay by Bank at scale, merchants would need to build coverage market by market, integrate multiple providers, and manage long implementations with high fees. In practice, this often forces businesses back onto the same expensive card rails they wanted to leave behind.

‍How Quidkey Makes Pay by Bank Better

Pay by Bank is powerful but fragmented. Each country runs its own rail and most providers only connect to a limited set of them. For merchants, this creates unnecessary complexity, from failed transactions when the wrong rail is used to long integration times and limited coverage.

Quidkey solves this with one integration and global reach. Our platform connects to multiple providers and networks across markets, and Quidkey orchestrates the best route for every transaction to ensure maximum reliability and conversion.

Here is how Quidkey makes Pay by Bank work for merchants:

  • Bank prediction at checkout: automatically detects and displays the customer’s bank as the first payment option to reduce friction and increase conversion
  • Cross-border and FX: built-in multi-currency support with seamless international settlement
  • Refunds: simple one-click refunds, just like card payments
  • Plug-and-play integrations: iFrame, Shopify, WooCommerce, Magento, iOS SDK, Android SDK, and API
  • Faster go-live: start accepting payments in minutes without heavy development work

Quidkey is available to merchants in more than 90 jurisdictions, enabling sales into the UK, EU, US, and Australia. While most providers remain tied to their domestic markets, Quidkey makes Pay by Bank a truly global payment solution.

Conclusion

Pay by Bank is more than a buzzword. It is a smarter, safer, and cheaper way for merchants to get paid. The model is already live in the United Kingdom and is rapidly expanding worldwide.

With Quidkey, you can enable Pay by Bank through a single integration, reduce your costs, eliminate fraud and chargebacks, and unlock a global payment solution built for merchants.

Add Quidkey to your checkout today

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Frequently Asked Questions

Which UK banks support open banking?

All major UK banks are required by law to support open banking. This includes the CMA9, a group made up of Barclays, HSBC, Lloyds, NatWest, Santander, Nationwide, Bank of Ireland, Danske Bank, and AIB. Many other banks and building societies have also implemented open banking APIs, making it available to the vast majority of UK consumers and businesses.

Is open banking safe in the UK?

Yes, open banking in the UK is regulated and secure. Only authorised third parties regulated by the Financial Conduct Authority (FCA) can access open banking data or initiate payments. Customers must give explicit consent, and every transaction uses Strong Customer Authentication (SCA), typically via biometric login or two-factor authentication. Data is encrypted and protected under strict GDPR and FCA standards.

What are the open banking transaction limits in the UK?

Transaction limits for open banking payments depend on the customer’s bank and the type of account. Most personal accounts allow payments up to £10,000 per transaction, with some banks supporting higher limits. Business accounts can often process significantly larger payments. However, some banks may impose daily or per-session caps to protect against fraud. These limits are gradually increasing as adoption grows and infrastructure matures.

What are the benefits of open banking for ecommerce in the UK?

Open banking offers ecommerce businesses faster, cheaper, and safer payments. It reduces transaction costs by cutting out card networks and other intermediaries. Payments typically settle instantly via Faster Payments, improving float and cash flow. Because transactions are initiated and authenticated through the customer’s bank, there is no card data to steal, and chargebacks are eliminated. This leads to lower fraud risk and fewer abandoned carts, especially on mobile. With a well-implemented pay-by-bank flow like Quidkey’s, merchants also see improved conversion and greater control over the checkout experience.

Does open banking provide payment protections?

Irrespective of the payment method, most merchants offer refunds or buyer protections via their respective terms and conditions and the same applies to open banking payments. Fraudulent card usage, CNP (card not present) or friendly fraud is not applicable to open banking as account-to-account transfers are directly authenticated via the customer’s bank app and require SCA (strong customer authentication). Further, generally applicable consumer protection laws like the Consumer Rights Act 2015 offer strong statutory rights and protect consumers beyond payments issues, providing consumers with return rights, product safety, delivery guarantees, and the ability to cancel, complain and get refunds. Additionally, platforms like Amazon, ebay, Shopify provide commercial protections beyond those required by law, such as 30-day return policies, ‘A-to-Z’ guarantee, and money back guarantees for non-delivery.