Why Pay by Bank is the Hottest Trend in Global Payments

Bank payment flows — often called “Pay by Bank”, “Open Banking”, or “account-to-account (A2A) payments” — are gaining traction. It’s not just hype. Governments and regulators are pushing the industry to develop alternative, cheaper, and more secure payment options, and technology is making that possible.

Key terminology explained

Account-to-account (A2A) payments are a process whereby money flows between sender and recipient bank accounts via established bank payment rails such as SEPA transfer, ACH, and Faster Payments.

Open Banking pertains to technical and regulatory frameworks that help non-bank participants move money and access data, often enabled by fintechs through their secure API protocols. A2A payments can be enabled through Open Banking service providers.

Pay by Bank is a method of payment offered by merchants to their customers. For example, a Pay by Bank payment button can be included at an e-commerce checkout page alongside credit cards and other payment methods. The Pay by Bank feature can be implemented by merchants through Open Banking fintechs or PSPs that enable A2A payment flows.

So, why does this matter? And what should businesses be doing about it right now?

The rise of Pay by Bank: Why now?

Across the world, businesses and consumers are demanding cheaper, faster, and more secure payment options. This has led to a growing adoption of open banking and real-time payment rails that bypass traditional card networks.

Here’s why Pay by Bank is at the center of this shift:

• Regulatory-driven innovation
  New regulations, particularly in Europe and the UK, are mandating banks to open their infrastructure to fintechs, allowing for seamless and direct payments between accounts. This removes the need for card networks, reducing fees and improving speed.
• Cost savings for businesses
  Businesses accepting card payments pay processing fees (also known as swipe fees), which include card interchange. These fees may range between 1-4% of the total cost of the sale, depending on the market and card type. In contrast, Pay by Bank transactions often come at a fraction of the cost as there are fewer intermediaries taking their cut of each transaction. For high-volume and high-average order value merchants, this represents a major opportunity to cut costs.
• Reduced fraud and chargebacks
  Unlike card payments, where compromised sensitive data can be more easily exploited, Pay by Bank transactions require biometric authentication and bank-level security, reducing fraud risks. Plus, reducing the false disputes and chargebacks often associated with card payments unlocks improved revenue predictability for merchants.
• Customer service
  If an order is canceled, or returned, a refund of the original payment can be processed faster through account-to-account transactions. In some cases, the refund could be instant once keyed by the merchant. Integrated Pay by Bank solutions processed via API carry richer data, enabling faster more accurate order look-up and reconciliation processes. This can improve customer satisfaction and brand loyalty.
• Faster settlement and liquidity benefits
  Traditional card payments can take days to settle. Open Banking-enabled Pay by Bank flows enable funds to move instantly or within hours, improving cash flow, reducing working capital constraints and improving reconciliation accuracy. ACH in the US can take a little longer to settle and carries increased risk of post-confirmation errors and returns – however the benefits often outweigh the risks when enabled via a comprehensive implementation framework.

Who benefits most from Pay by Bank?

Pay by Bank has universal applicability across industries, but certain sectors stand to gain the most:

Merchants

• E-commerce & Retail – Lower transaction fees mean higher profit margins. Merchants can also incentivize customers with discounts for choosing Pay by Bank.
• B2B Payments – Businesses processing large invoice payments can significantly cut costs compared to wire transfers and corporate cards.
• Subscription Services & Bill Pay – Utility companies, telecom providers, and SaaS businesses can improve cash flow and reduce failed payments.
• Luxury & High-Value Transactions – High-ticket merchants, from automotive sales to fine jewelry, can avoid excessive card fees while ensuring secure, real-time payments.

The customer

• The buyer also stands to benefit from cashflow certainty, with some options baked into the service as standard, including:
  • Bank-grade security
  • Faster refunds
  • Cashflow certainty
• Incentive to purchase via Pay by Bank instead of other payment methods is a challenge that merchants will need to tackle through development of their own custom strategy. There are a variety of methods by which this can be achieved, of which merchants will need to select an approach that suits their business model and buyer profile.

It is important to note that Pay by Bank may not follow every business model and payments environment. To determine whether it may add value requires careful analysis.

Implementation: How hard is it?

One of the most common questions from merchants is: “How difficult is it to implement Pay by Bank?” The answer broadly depends upon the maturity of the business’s technical change management processes and the facilities available from their existing payment providers.

For most businesses, integration falls into one of three categories:

1. Simple: If your company already works with a PSP that offers a range of local and alternative payment methods, Pay by Bank may be a relatively lighter lift to implement.
2. Moderate: If your PSP doesn’t support Pay by Bank, you’ll need to evaluate new providers, integrate APIs, and adjust operational and financial workflows.
3. Complex: If your business sells in multiple markets or is undergoing a full-scale payments transformation — such as replacing acquirers, fraud systems, or tokenization services — Pay by Bank may be a piece of a broader strategy.

Regardless of complexity, the key first steps to take include a thorough business case assessment, including risks and opportunities. Redbridge helps merchants analyze potential savings, operational impact, and customer adoption strategies to determine whether Pay by Bank is a viable addition to their payments ecosystem.

The Redbridge perspective: Why now is the time to act

There’s no doubt that Pay by Bank is one of the most-discussed topics in payments today. But despite the buzz, many businesses remain hesitant to act.

That’s understandable. Payment innovation always comes with uncertainty — especially when it involves regulatory shifts and new industry players. However, those who wait too long risk being left behind.

Companies that implement Pay by Bank today can:

• Gain a competitive edge with lower payment costs
• Improve security and fraud protection
• Enhance customer experience with seamless, real-time payments
• Future-proof their payment strategy as adoption accelerates

The opportunity is here. The question is: Is your business ready to take advantage of it?

Let’s talk. Redbridge is helping businesses navigate this transformation, from assessing feasibility to executing strategy. We have helped enterprise businesses selling B2B and D2C implement Pay by Bank, including ACH in the US, Open Banking-enabled flows in the UK and Europe, and more.

Contact us today to explore how Pay by Bank can fit into your payments roadmap.