Payment methods
Pay by Bank: how account-to-account payments work for merchants
Pay by Bank is an account-to-account payment: the shopper approves a transfer directly from their bank account in their own banking app, and the money reaches the merchant without a card network. It runs on open banking (PSD2 payment initiation in the EU, Open Banking in the UK) and usually settles instantly or the same day, with no chargebacks.
At a glance
| Type | Account-to-account (A2A) bank transfer initiated through open banking |
|---|---|
| Markets | EU and EEA (PSD2 payment initiation), United Kingdom (Open Banking); coverage depends on the connected banks |
| Currencies | EUR via SEPA and SEPA Instant; GBP via Faster Payments; other currencies depend on the provider |
| Shopper experience | Choose a bank, authenticate in the banking app, confirm the pre-filled transfer; no card details typed |
| Settlement | Typically instant or same day when the payer bank supports instant rails; otherwise next business day |
| Chargebacks | None; disputes are handled as refunds between merchant and shopper |
| Refunds | Supported as outbound transfers; timing and API support vary by provider |
| Recurring | Limited; variable recurring payments exist in the UK, elsewhere SEPA Direct Debit is the usual choice |
| Cost | Set by the PSP, usually a fixed fee or a small percentage per payment; there is no card interchange or scheme fee |
| Availability via OrsunPay | Available through a connected PSP that offers Pay by Bank, such as Stripe or Adyen |
Pay by Bank versus common checkout options
| Method | Who initiates | Chargebacks | Confirmation | Recurring | Best for |
|---|---|---|---|---|---|
| Pay by Bank | Shopper, in the banking app | None | Real time | Limited | Larger baskets, bills, top-ups |
| Card payment | Merchant, with card data | Yes, under scheme rules | Real time | Yes | Everyday retail |
| SEPA Direct Debit | Merchant, with a mandate | 8-week no-questions refund right | Days later | Yes | Subscriptions |
| Manual bank transfer | Shopper, manually | None | Hours to days | No | B2B invoices |
| OrsunPay (our product; orchestration layer, not a provider) | Your checkout, with methods from your connected PSPs | Per method, as set by the PSP | Status from each PSP in one webhook format | Per method and PSP | Merchants running several PSPs and local methods through one integration |
What Pay by Bank is
Pay by Bank is the consumer-facing name for a payment that moves money straight from the shopper's current account to the merchant's account. Instead of entering a card number, the shopper picks their bank at checkout, is redirected to the bank's app or website, approves a transfer that is already filled in with the amount and reference, and returns to the merchant with a confirmation.
The technical basis is open banking. In the European Union and EEA, PSD2 obliges banks to let licensed third parties initiate payments on a customer's behalf; the same model exists in the United Kingdom under the Open Banking standard. The merchant never sees bank credentials, and strong customer authentication happens inside the banking app.
How a Pay by Bank payment flows
From the merchant's point of view the flow is close to any redirect method such as iDEAL or Bancontact, which makes it easy to add next to existing options.
- Create the payment Your system creates a payment with amount, currency and reference through your payment provider or orchestration layer.
- Bank selection The shopper chooses their bank from a list of supported institutions at checkout.
- Authentication The shopper is handed to the bank's app or web banking and approves the pre-filled transfer with their usual strong authentication.
- Confirmation The provider receives the bank's confirmation and notifies your system through a signed webhook; the order can be released.
- Settlement Funds arrive on instant rails where available, otherwise with the next SEPA or Faster Payments cycle.
Pay by Bank compared with cards and other methods
The method sits between a classic bank transfer and a card payment: it has the certainty of a push payment but the checkout speed shoppers expect. The comparison table at the top of this page shows where it differs from the options merchants usually place next to it.
What it costs and why it is cheaper than cards
A card payment carries interchange, scheme fees and the acquirer's margin, and the merchant also pays for fraud tooling and chargeback handling. An account-to-account payment avoids the card schemes entirely, so providers usually price it as a fixed fee per transaction or a small percentage with a cap. Fraud exposure is lower because the bank authenticates the payer and the transfer cannot be reversed by the shopper unilaterally.
The savings grow with basket size, which is why the method is popular for furniture, travel, electronics, tuition, rent and account top-ups. For very small baskets the fixed fee can be comparable to a card payment, so merchants often show Pay by Bank from a certain amount upwards.
Where Pay by Bank is available
Coverage is defined by the banks a provider connects to, not by the method itself. In the United Kingdom, Open Banking covers the large retail banks, and Pay by Bank is common for bill payments and e-commerce. In the EU, the same mechanism appears under national brands and new schemes, including iDEAL in the Netherlands, Bancontact's bank-app flow in Belgium, and Wero, the European Payments Initiative wallet that is built on instant SEPA transfers.
For a merchant selling across Europe the practical question is which providers cover the banks your customers actually use in each country. An orchestration layer lets you connect more than one provider and route each country to the best-covered connection.
Refunds, disputes and recurring payments
Because the shopper pushes the funds, there is no chargeback mechanism. A refund is a new outbound transfer to the shopper's account, which most providers expose through an API using the original payment reference. Disputes therefore stay between merchant and customer, which lowers operational cost but also means consumer protection rests on your returns policy rather than on scheme rules.
Recurring account-to-account payments are still maturing. The UK has variable recurring payments for selected use cases; in the euro area merchants typically combine a first Pay by Bank payment with a SEPA Direct Debit mandate for repeat charges.
What changes with SEPA Instant and the Instant Payments Regulation?
Regulation (EU) 2024/886, the Instant Payments Regulation, requires payment service providers in the euro area to receive SEPA Instant credit transfers from 9 January 2025 and to send them from 9 October 2025, at no higher price than a standard transfer. From 9 October 2025 they must also check that the payee name matches the IBAN before the payer confirms.
For merchants this means more Pay by Bank payments in euro settle in seconds, around the clock, instead of on the next business day. Member states outside the euro area follow later deadlines set in the same regulation.
How can I add Pay by Bank through OrsunPay?
Most PSPs expose Pay by Bank as a redirect or app-to-app flow and report the result by webhook. Before launch, check which banks are covered per country, whether refunds are available through the API, how reconciliation references are passed and what happens when a shopper abandons the flow in the banking app.
Pay by Bank is available via OrsunPay through a connected PSP that offers it, such as Stripe or Adyen. It appears in your checkout and payment links for the countries and currencies that PSP covers. OrsunPay is a payment orchestration platform that connects you to licensed PSPs; it does not process or hold funds itself. OrsunPay plans are on the pricing page.
Frequently asked questions
What is Pay by Bank?
Pay by Bank is an account-to-account payment. The shopper picks their bank at checkout, approves a pre-filled transfer in the banking app and returns to the shop. A licensed payment initiation provider starts the transfer under PSD2 in the EU or Open Banking rules in the UK, so no card network is involved.
Is Pay by Bank the same as open banking payments?
In practice, yes. Pay by Bank is the shopper-facing name, and open banking payment initiation is the regulated mechanism underneath it in the EU and the UK. Some national schemes, such as iDEAL in the Netherlands, work in a similar account-to-account way but run on their own rules and brands.
Can a shopper reverse a Pay by Bank payment?
No. It is a push payment that the shopper approves in their own banking app, so there is no chargeback right like with cards. If the shopper wants their money back, the merchant sends a refund as a new transfer, usually through the PSP's API using the original payment reference.
How fast does the merchant receive the money?
Where the payer's bank supports SEPA Instant or UK Faster Payments, the transfer arrives in seconds. Since October 2025 euro-area banks must be able to send instant transfers. Otherwise the money arrives with the next settlement cycle, usually the next business day, depending on the PSP's payout schedule.
What does Pay by Bank cost compared with cards?
There is no card interchange or scheme fee, so PSPs usually charge a fixed fee or a small percentage per payment. Savings grow with the basket size, while for very small payments a fixed fee can cost about as much as a card. Check the published price list of the PSP you plan to connect.
Which countries support Pay by Bank?
The United Kingdom and most EU and EEA countries, with coverage depending on which banks your PSP has connected. Shoppers need online banking at a covered bank. National schemes such as iDEAL and Wero use a similar account-to-account model and are often offered next to Pay by Bank.
Is Pay by Bank suitable for subscriptions?
Only partly. The UK has variable recurring payments for selected use cases, but in the euro area recurring open banking payments are not yet common. Merchants usually take the first payment with Pay by Bank and collect later ones with SEPA Direct Debit or a stored card.
Can I accept Pay by Bank through OrsunPay?
Yes. Pay by Bank is available via OrsunPay through a connected PSP that offers it, such as Stripe or Adyen. OrsunPay adds it to your checkout and payment links and passes status and refund events to your systems, while the PSP processes the payment. Plans are on the pricing page.