From the original research pack. This draft has not received a complete claim-by-claim review. Fees, product terms, statistics and legal status may have changed. Its preparation date is not a publication date. Use the linked original sources.

Last updated September 17, 2026.

At more online checkouts, a new button sits beside the card logos: "Pay by bank." Instead of typing card numbers, you log in to your bank, approve the payment, and the money moves straight from your account to the merchant's. Merchants like the lower fees. Card networks are adapting. But whether bank payments actually displace cards depends on something less glamorous than technology: who protects the shopper when something goes wrong.

Key takeaways

  • Pay by bank is an account-to-account (A2A) payment initiated at checkout, usually through open banking or instant payment rails.
  • Cards still dominate U.S. payments by count: more than three-quarters of 236.6 billion noncash payments in 2024 [1].
  • Adoption is furthest along in countries with strong public rails or open-banking mandates, such as Brazil, India, and the U.K. [2][3][4].
  • The biggest gap versus cards is buyer protection: A2A payments lack built-in chargebacks, though the U.K. and Brazil have added scam-reimbursement or recovery rules [5][6].

What "pay by bank" means

Account-to-account (A2A) payments move money directly between two bank accounts without a card network in the middle. "Pay by bank" is the checkout version: the merchant asks your bank to send a payment, and you approve it.

There are a few common flavors:

Type How it works Where it's common
Open banking payment initiation A licensed third party connects to your bank via API; you approve in your banking app U.K., EU
QR or alias-based instant payments You scan a QR code or pay a phone number/key through a national instant rail India (UPI), Brazil (Pix)
ACH-based pay by bank Your account is linked (often through a data aggregator) and debited via ACH United States
Instant-rail pay by bank A payment is pushed over RTP or FedNow, sometimes via Request for Payment United States (emerging)
Variable recurring payments (VRP) You set up a mandate allowing a provider to take varying amounts within limits U.K.

Related field note Related field note

Why merchants want it

Lower acceptance costs

Card acceptance costs include interchange, network fees, and processor markups. A 2026 summary of the Visa and Mastercard merchant settlement cited a 2024 baseline weighted-average fee of 2.35% on those networks' transactions [7]. A2A payments typically avoid interchange entirely, though merchants still pay the provider that initiates or processes the payment. Pricing varies widely, so compare total costs rather than headline claims. Related field note

Faster access to funds

Payments over instant rails can settle in seconds, which helps cash flow.

Fewer card-specific failures

Bank payments avoid expired cards and some types of card fraud. Recurring payments via VRP can adjust amounts without a new authorization each time.

Why consumers hesitate

Habits and rewards

U.S. shoppers are used to cards, and many credit cards pay rewards that bank payments don't. The Federal Reserve's 2025 triennial study found credit card payments growing faster than debit for the first time in nearly a decade [1].

Protection

With a credit card, U.S. law lets you dispute billing errors in writing within 60 days of the statement [8], and card networks add chargeback rules on top. A2A push payments are generally final once sent. If you're tricked into paying a scammer, recovery depends on local rules and your bank's policies. Related field note

Friction

Logging in to a bank, especially one with clunky authentication, can be slower than a saved card or a digital wallet. Related field note

Cards vs. pay by bank: a side-by-side

Factor Cards Pay by bank (A2A)
Typical merchant cost Interchange + network + processor fees Provider fees; usually no interchange
Settlement to merchant Usually a day or more Seconds (instant rails) to days (ACH)
Consumer credit Available (credit cards) No, uses existing balance
Rewards Common on credit cards Rare
Dispute rights (U.S.) Strong for credit cards under federal law and network rules [8] Limited; depends on rail and bank
Fraud liability Largely on issuers/merchants under network rules Varies; scams often fall on payers unless rules require reimbursement
Acceptance Nearly universal Growing, uneven

Where pay by bank is winning

Brazil and India

Pix and UPI show what happens when a public A2A rail is free for individuals and nearly universal. Pix recorded about 318 million transactions on a single day, September 4, 2026 [3]; UPI processed 24.51 billion transactions in August 2026 [2]. Related field note

United Kingdom

Open Banking Limited reported in July 2026 that the U.K. had passed 1 billion cumulative open-banking payments, with 40.1 million payments in June 2026 alone; variable recurring payments rose 6.7% month over month [4]. On June 2, 2026, the Financial Conduct Authority welcomed the launch of the UK Payments Initiative, an industry scheme for commercial VRPs that aims to let people pay for recurring goods and services by bank; the FCA said it would consult on a longer-term regulatory framework by the end of 2026 [9].

The U.K. also has a consumer-protection backstop that the U.S. lacks: since October 7, 2024, payment providers must reimburse eligible victims of authorized push payment (APP) scams sent over Faster Payments, up to £85,000 per claim [5].

European Union

From October 9, 2025, payment providers in the euro area must let customers send instant euro payments, verify that the payee's name matches the account number, and charge no more for instant transfers than for standard ones; the rules extend outside the euro area from January 2027 [10]. Separately, Wero, a bank-backed European wallet built on instant payments, reported more than 50 million users by February 2026 and has begun rolling out e-commerce acceptance, with in-store QR payments planned for 2026 [11].

Where the U.S. stands

The U.S. has the building blocks but not yet mass adoption:

  • Rails: RTP and FedNow both support instant payments up to $10 million [12].
  • Data access: Many U.S. pay-by-bank products rely on data aggregators to link accounts. The CFPB's open-banking rule, finalized in October 2024, is enjoined and under reconsideration [13]. In 2025, JPMorgan Chase began charging aggregators such as Plaid for data access, a move fintech trade groups criticized [14]. Access costs could affect pay-by-bank pricing.
  • Settlement fight: If the Visa/Mastercard settlement receives final approval, lower card fees could reduce merchants' incentive to switch, while new rights to steer customers could increase it. Final approval and appeals are still pending [7].
  • Protection gap: There is no U.S. equivalent of the U.K.'s mandatory APP scam reimbursement.

Will A2A replace cards?

Probably not wholesale, at least not soon. A more realistic outlook:

  1. Specific use cases shift first. Bills, rent, account funding, large-ticket purchases, and B2B payments, where card fees are painful and chargebacks matter less, are natural fits.
  2. Card networks adapt. Visa and Mastercard have announced their own A2A and pay-by-bank products, positioning themselves to earn revenue either way [15].
  3. Protection becomes the battleground. Consumers will adopt pay by bank at scale when it feels as safe as a card. Rules like the U.K.'s reimbursement regime and Brazil's MED 2.0 fraud-recovery tool point in that direction [5][6].
  4. Incentives matter. Merchants may offer discounts for paying by bank, where allowed, to offset the lack of rewards.

Explore the fee worksheet

FAQ

What is pay by bank? It's a checkout option that moves money directly from your bank account to the merchant, using open banking, instant payment rails, or ACH instead of a card network.

Is pay by bank safe? It can be secure because you approve payments in your bank's own app. But A2A payments are usually final, and refund rights are generally weaker than for credit cards [8].

Why do merchants prefer pay by bank? It usually avoids card interchange fees and can settle faster. Merchants still pay providers, so savings vary.

Can I get a refund on a pay-by-bank purchase? Merchants can issue refunds. If you were scammed, protections depend on where you live; the U.K. requires reimbursement for eligible APP scams up to £85,000 [5].

Is pay by bank available in the U.S.? Yes, from various providers, but adoption is limited compared with cards. Many offerings use ACH or instant rails through account-linking services.

What are variable recurring payments? VRPs let you authorize a provider to collect varying amounts from your bank account within limits you set. The U.K. launched a commercial VRP scheme in 2026 [9].

Sources

  1. Federal Reserve Board, "Federal Reserve issues initial findings from its 2025 triennial payments study," https://www.federalreserve.gov/newsevents/pressreleases/other20260701a.htm, July 1, 2026, accessed 2026-09-17.
  2. Business Standard, "UPI sets new record at 24.51 bn transactions in Aug, value at ₹29.82 trn," https://www.business-standard.com/finance/news/upi-transactions-august-2026-record-volume-npci-126090100506_1.html, Sept. 1, 2026, accessed 2026-09-17.
  3. Seu Crédito Digital, "Pix bate recorde de 318 milhões de transações," https://seucreditodigital.com.br/pix-bate-recorde-318-milhoes-transacoes/, Sept. 7, 2026, accessed 2026-09-17.
  4. PYMNTS, "Open Banking Reaches 1 Billion Payment Milestone in the UK," https://www.pymnts.com/news/banking/2026/open-banking-reaches-1-billion-payment-milestone-in-the-uk/, July 28, 2026, accessed 2026-09-17. (Reporting Open Banking Limited data.)
  5. Payment Systems Regulator, "PS24/7 Faster Payments APP scams reimbursement requirement: Confirming the maximum level of reimbursement," https://www.psr.org.uk/publications/policy-statements/ps247-faster-payments-app-scams-reimbursement-requirement-confirming-the-maximum-level-of-reimbursement/, Oct. 2, 2024, accessed 2026-09-17.
  6. Agência Brasil, "Novas regras de segurança do Pix entram em vigor; veja mudanças," https://agenciabrasil.ebc.com.br/economia/noticia/2026-02/novas-regras-de-seguranca-do-pix-entram-em-vigor-veja-mudancas, Feb. 2, 2026, accessed 2026-09-17.
  7. Payments Dive, "Court approves Visa-Mastercard settlement," https://www.paymentsdive.com/news/court-approves-visa-mastercard-settlement/822440/, June 2026, accessed 2026-09-17.
  8. Consumer Financial Protection Bureau, "How do I dispute a charge on my credit card bill?," https://www.consumerfinance.gov/ask-cfpb/how-do-i-dispute-a-charge-on-my-credit-card-bill-en-61/, accessed 2026-09-17.
  9. Financial Conduct Authority, "Open banking takes next step forward with launch of UK Payments Initiative scheme," https://www.fca.org.uk/news/statements/open-banking-launch-uk-payments-initiative-scheme, June 2, 2026, accessed 2026-09-17.
  10. European Commission, "New EU rules make instant euro payments faster and safer," https://finance.ec.europa.eu/news/new-eu-rules-make-instant-euro-payments-faster-and-safer-2025-10-10_en, Oct. 2025, accessed 2026-09-17.
  11. Wikipedia, "Wero (payment)," https://en.wikipedia.org/wiki/Wero_(payment), accessed 2026-09-17. (Secondary reference; verify user figures with EPI.)
  12. Federal Reserve Bank of Richmond, "FedNow and the Development of U.S. Fast Payments," Economic Brief No. 26-28, https://www.richmondfed.org/publications/research/economic_brief/2026/eb_26-28, August 2026, accessed 2026-09-17.
  13. Cozen O'Connor, "Section 1033 Compliance Date: Open Banking Rule Enjoined and Under Reconsideration," https://www.cozen.com/news-resources/publications/2026/section-1033-compliance-date-open-banking-rule-enjoined-and-under-reconsideration, Apr. 9, 2026, accessed 2026-09-17.
  14. Payments Dive, "Plaid to pay for JPMorgan data," https://www.paymentsdive.com/news/plaid-to-pay-for-jpmorgan-data-open-banking-fintechs/760192/, Sept. 16, 2025, accessed 2026-09-17.
  15. American Banker, "Visa, Mastercard, Dwolla and Walmart launch pay-by-bank projects," https://www.americanbanker.com/payments/list/visa-mastercard-dwolla-and-walmart-launch-pay-by-bank-projects, Oct. 25, 2024, accessed 2026-09-17.

Disclaimer: This article is for educational purposes only and is not financial, legal, or tax advice. Fees, consumer protections, and rules vary by provider and country and change over time; verify current terms with your bank and payment provider.

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