What is Pay by Bank? How it works in the US, UK and EU

What does Pay by Bank mean?

Pay by Bank is a checkout option that lets a customer pay from a checking or current account instead of a credit or debit card. The customer selects their bank, signs in with the credentials or app they already use, and approves the payment. No card number is typed and no card network is involved: the money moves from one bank account to another, which is why the industry also calls it an account-to-account (A2A) payment.

It is not the same as a classic bank transfer, where the customer copies account details and a reference by hand and the merchant matches the payment later. With Pay by Bank the amount, payee and reference are filled in for the customer, and the merchant receives a confirmation through its payment provider, so the order can be released straight away.

You will see the same idea under several names:

• Pay by Bank, Bank Pay or Pay with Bank: labels used at checkout by merchants and payment providers.
• Account-to-account (A2A) payments: the industry term for money moving directly between bank accounts.
• Open banking payments: the UK and EU term, after the regulated access banks give to licensed third parties.
• Instant bank payments: versions that run on real-time rails such as RTP, FedNow, Faster Payments or SEPA Instant.
• Local brands: iDEAL in the Netherlands and Wero in several euro countries are built on the same model.

How does Pay by Bank work?

To the customer the flow looks much the same in every market, even though the payment rails underneath differ by country. Here is what happens between the checkout button and the order confirmation:

1. Choose Pay by Bank At checkout the customer picks Pay by Bank instead of a card or a wallet.
2. Select the bank The customer chooses their bank from a list. On a phone the banking app usually opens directly; on a desktop the bank's sign-in page or a QR code is shown.
3. Sign in and approve The customer signs in to the bank, checks the amount and the payee, and approves. Bank credentials are never shared with the merchant.
4. Payment is initiated Depending on the market, the bank sends an instant transfer, or the payment provider collects a bank debit the customer has just authorized.
5. Merchant gets the result The payment provider confirms the result to the merchant, typically by webhook, and the customer returns to the order confirmation page.
6. Funds settle Money arrives within seconds on instant rails, or in one to two business days on standard ACH in the US.

How does Pay by Bank work in the US?

In the United States, Pay by Bank most often means a bank debit over the ACH network. The customer links their account by signing in to their bank through an account-connection service, which confirms that the account exists, belongs to them and, in many setups, holds enough money. The merchant's payment provider then collects an ACH debit for the order amount. Standard ACH settles in one to two business days, and Same Day ACH can carry up to $1 million per payment.

Instant versions are growing. The RTP network run by The Clearing House and the Federal Reserve's FedNow Service move money in seconds, around the clock, and both now allow up to $10 million per transaction (RTP since February 2025, FedNow since November 2025). At checkout, instant rails are used mainly through request-for-payment flows: the merchant sends a request and the customer approves a push payment in the banking app. Support for these requests still varies from bank to bank.

Unlike the UK and EU, the US has no open banking mandate in force yet. The Consumer Financial Protection Bureau (CFPB) finalized a personal financial data rights rule under section 1033 of the Dodd-Frank Act in 2024, but a federal court stayed its compliance dates on 29 October 2025 and the CFPB is reconsidering the rule. Until that is settled, account access mostly runs on agreements between banks and account-connection providers.

What this means for a US merchant:

• Account validation: Nacha rules require businesses that take consumer debits online to validate the bank account before its first use.
• Fraud monitoring: since 22 June 2026 every business that originates ACH entries must have risk-based processes to spot fraudulent ones; the largest originators have had to since 20 March 2026.
• Returns: a debit can come back unpaid within two banking days, for example for insufficient funds, and a consumer can report a debit as unauthorized so that their bank returns it up to 60 calendar days after settlement. Plan for returns the way you plan for card disputes.
• Consumer protection: transfers from consumer accounts fall under the Electronic Fund Transfer Act and Regulation E.

How does Pay by Bank work in the UK and Europe?

In the UK and the EU, Pay by Bank is built on open banking. Regulation requires banks to let licensed payment initiation providers start a payment on the customer's instruction: PSD2 in the EU and EEA, and the Open Banking framework in the UK. The customer approves with strong customer authentication in the banking app and the bank sends a push payment, so there is no debit that can be pulled back later.

In the UK, these payments usually run on Faster Payments and arrive within seconds. Open banking payments grew by 53% in 2025, according to the Payment Systems Regulator (PSR). Since 7 October 2024, customers who are tricked into sending a Faster Payment to a fraudster can claim reimbursement from their bank, up to £85,000 per claim. That protection covers scams, not disputes with an honest merchant.

In the euro area, the Instant Payments Regulation has required banks to receive instant euro transfers since 9 January 2025 and, since 9 October 2025, to send them and check the payee's name against the IBAN, at no higher price than a standard transfer. That makes SEPA Instant the natural rail for Pay by Bank in euro, alongside national brands such as iDEAL and Wero.

Pay by Bank vs cards, ACH and wire transfers

The table compares the two main kinds of Pay by Bank with the options merchants usually place next to them. Fees and timings are typical values; your provider's contract decides the exact terms.

What are the benefits and drawbacks of Pay by Bank?

For a merchant, Pay by Bank trades card fees and chargebacks for a different set of limits. Whether it pays off depends on basket size, the markets you sell in and how your customers like to pay.

• Lower cost: there is no interchange or card scheme fee, so the price per payment is usually below a card payment, especially on large baskets.
• Fewer disputes: the UK and EU have no chargeback; in the US, ACH returns exist but follow Nacha rules rather than card scheme rules.
• Less fraud exposure: the bank authenticates the customer, and there is no card number to steal at checkout.
• Faster money: instant rails settle in seconds, which helps cash flow and makes top-ups and bill payments usable at once.
• Drawback, coverage: not every bank or credit union supports the flow, so Pay by Bank sits next to cards rather than replacing them.
• Drawback, recurring payments: subscriptions are still easier with cards or direct debits; variable recurring payments are only being rolled out in the UK.
• Drawback, refunds and rewards: refunds are separate outbound transfers, and customers give up card rewards, so some will keep paying by card.

How to offer Pay by Bank through OrsunPay

OrsunPay is a payment orchestration platform: it connects your checkout to the licensed payment providers you hold accounts with and does not process or hold funds itself. Pay by Bank appears in hosted checkout and payment links when a connected provider supports it for the customer's country and currency, next to cards and local methods such as iDEAL or Wero.

Routing rules decide which provider handles bank payments in each country, and refunds and webhooks follow the same flow as your other methods. Availability, fees and payout timing are set by each provider.