Posted: November 12, 2025 | Updated: January 20, 2026 at 11:56 AM
Open banking payments is ushering in a new era of “pay-by-bank” or account-to-account (A2A) payments that let shoppers pay merchants directly from their bank accounts. Instead of entering a credit card number, customers log in to their banking app or website during checkout and authorize a transfer. This direct bank-to-bank flow bypasses the card networks entirely, resulting in faster payment confirmation and a more secure transaction.
In many markets (mainly Europe and the UK), regulators have mandated open banking APIs, enabling fintechs and payment platforms to access customers’ bank accounts (with permission) to initiate payments. The result is a checkout revolution: more merchants and payment providers are offering native bank transfer options at checkout.
This article explores those developments – from Revolut’s new payment gateway feature to Mastercard’s partnership with Paytently – and explains why open-banking payments can save merchants money and headaches by slashing fees and virtually eliminating chargebacks.
Open banking refers to the practice of banks exposing secure APIs so authorized third-party providers can access customer accounts (with consent). Under rules such as Europe’s PSD2 or the UK’s Open Banking framework, consumers can grant apps or fintechs read-only access to account balances or initiate payments directly.
When applied to e-commerce, this creates account-to-account checkout, where a customer chooses “pay with bank account” and selects their bank. The merchant’s system or payment gateway then redirects the shopper to the bank’s authentication page (or opens the bank’s app), the customer logs in and approves the payment, and funds are pulled immediately from the account. The customer pushes money to the merchant instead of the merchant pulling payment via a card.
Because these A2A payments use the bank’s own login and strong customer authentication (biometrics, one-time codes, etc.), they tend to be more secure than a simple card swipe. And because no card is involved, there are no interchange or scheme fees (or chargeback disputes) tied to a credit network.
Open banking payments are already common in parts of Europe and Asia and are gradually gaining ground worldwide. Payment analysts note that two factors drive this trend. The first is lower costs, and the second is better user experience. Banks can offer instant or real-time payments instead of multi-day ACH, and tech-savvy shoppers appreciate the convenience of paying directly from their phone banking app.
E-commerce is starting to see real momentum in pay-by-bank options. In Europe, for example, fintech firms and banks have been racing to add direct bank payments. One prominent example is the FinTech firm Revolut, which in late 2025 announced a new “Pay by Bank” feature for its merchant gateway. With this feature, Revolut’s business customers (online retailers) can display a bank transfer button at checkout. When shoppers click it, they are redirected to authenticate via their own bank app and confirm the payment. Revolut reports that merchants receive funds instantly, improving cash flow and the customer experience.
And because the bank authorizes every transaction, the risk of fraud or unauthorized chargebacks is “drastically” reduced. This feature launched initially in the U.K. and a dozen European countries (including France, Germany, Italy, Spain, and others), showing a strong demand. Revolut observed that U.K. pay-by-bank volumes nearly doubled in just one year.
Major payment networks and platforms are also backing open-banking checkout. For instance, Mastercard recently partnered with payments provider Paytently to roll out an optimized bank-payment solution for e-commerce. This new offering – powered by Mastercard’s “Open Finance” APIs – lets online shoppers pay via bank while merchants benefit from Mastercard-grade tokenization and routing.
Mastercard’s system issues a secure token instead of transmitting raw bank credentials, and Paytently’s orchestration engine routes each payment over the fastest rail (ACH or instant pay) to confirm it instantly. The goal is to cut fraud and improve checkout conversion by using the shopper’s bank login, fully authenticating transactions, and ensuring the merchant can be sure funds are on the way. Mastercard and Paytently’s collaboration will bring open-bank payments to more merchants globally, giving customers a “trusted, seamless” way to pay without cards.
Other industry players are moving similarly. Payment processors like Stripe now support a “Pay by Bank” option in Europe, letting U.K., German or French customers select their bank and approve a transfer instead of entering card details. Stripe notes that after the user authenticates the payment in their banking app, the transfer is settled with no card network involved – meaning no chargeback process is needed (once authorized, the funds cannot be clawed back as easily as a card payment).
In the U.S., the infrastructure is evolving, too. In 2023, the Federal Reserve launched its FedNow real-time payment network, which paves the way for instant bank transfers nationwide. Retail giants are experimenting as well. Walmart announced plans (with tech partner Fiserv) to offer instant bank transfer checkout by 2025, linking customers’ bank accounts to their Walmart Pay wallets. All these moves indicate that A2A payments are moving beyond theory into real-world use.
The big reason retailers care about open-banking checkout is cost and risk reduction. Traditional credit card transactions carry fees of 1 to 3% (plus flat fees) for every sale, and additional expenses or losses when a cardholder disputes a charge. By contrast, bank-to-bank payments typically cost much less. In many cases, a merchant might pay a fixed small fee per transaction (for example, a few cents) instead of a percentage of the sale.
Businesses could save 40-80% on processing costs by switching to pay-by-bank, depending on volumes and pricing models. (That said, merchants do incur some fees to the payment provider and possibly to their bank for each transfer. Even so, the overall rate is usually far below typical card interchange.)
There are other direct merchant advantages as well:
Account-to-account transfers can settle much more quickly than credit cards. Many A2A solutions offer instant or same-day funding, whereas card transactions may take 1-3 business days to decide. Real-time settlement means the merchant’s bank account is credited immediately upon customer payment. This improves cash flow and reduces waiting time.
And because the bank authorizes the payment, the funds are essentially guaranteed, avoiding the slow authorization hold that can happen with cards.
One of the biggest headaches with credit cards is chargebacks: a buyer can dispute a card charge and force the merchant to refund it, often losing the merchandise and paying a chargeback fee. By contrast, pay-by-bank payments require the customer to log in and actively approve the transfer. As a result, once the payment goes through, it cannot be disputed by a simple card reversal.
Most open-banking payment flows explicitly have no chargeback process—if a consumer wants a refund, it must be handled through the merchant (as with a cash or check payment), not via a network dispute. This means merchants face far fewer fraud claims or reversals.
A2A payments leverage the bank’s security infrastructure. Customers typically must pass two-factor authentication (biometrics, one-time code, etc.) in the banking app before a payment is authorized. This multi-layered security is much harder for a fraudster to bypass than a stolen credit card number. And because the merchant never sees the customer’s full bank credentials, sensitive data is better protected.
In fact, many solutions tokenize the payment information: the bank issues a one-time token for the transaction rather than sharing the raw account details. This tokenization means even if data were intercepted, it couldn’t be reused. Combined with SSL encryption and other safeguards, open-banking payments often boast stronger fraud controls. These design features make account-to-account transfers inherently safer, cutting down chargeback rates and bogus disputes.
Today’s consumers, especially mobile and younger shoppers, appreciate speed and simplicity. Pay-by-bank can be extremely fast: shoppers pick their bank, authenticate with perhaps a fingerprint or passcode, and return to the merchant, all within a few taps. This eliminates the need to type card details, CVV codes, or billing addresses. Fewer form fields and steps mean lower abandonment.
Industry reports suggest that offering bank payments at checkout can boost conversion rates by several points, particularly for customers whose cards might otherwise be declined or who prefer bank payments. It also opens up shopping to people without cards; for example, a growing segment of consumers now primarily use banking apps and might welcome a checkout option that fits their habits.
Some shoppers feel more confident when paying through their own bank, which they trust, rather than third parties. By partnering with banks or trusted fintechs, merchants can tap into that brand trust.
Plus, because open-banking payments rely on the customer’s existing bank account, merchants often get useful confirmation data (for instance, verified account numbers or proof of funds). This transparency can strengthen the merchant-consumer relationship and may even help with post-sale services (like refunds or memberships tied to the bank account).
The trend isn’t limited to one or two companies. A few more examples illustrate the momentum:
Stripe, one of the world’s largest online payment processors, launched Pay by Bank in Europe. Merchants using Stripe can enable this in their dashboard so UK, German, or French customers can select their bank at checkout.
Once customers authenticate in their bank’s app, the merchant receives an immediate confirmation, and the funds are routed without going through card networks. Many other gateways and platform providers (Braintree, Adyen, etc.) are either already offering or exploring similar bank payment integrations, especially in markets with strong open banking adoption.
Mastercard and Visa aren’t sitting out. In addition to the Paytently project mentioned above, these card networks also have open banking initiatives. For example, Mastercard launched a service called Mastercard Open Banking (formerly Mastercard Open Banking API) to let merchants connect to banks for A2A payments or data.
Visa has an “Open Banking Program” to build partnerships with fintechs for A2A and direct banking flows. Such moves show the incumbents see A2A not as a threat, but as a complementary rail that they can integrate. They often highlight features such as tokenization (familiar from cards) to secure new payment flows.
Beyond pure fintechs, some retailers and apps are enabling A2A. We already mentioned Walmart’s plan in the U.S. In Europe, many banks allow customers to pay merchants directly through their online banking or mobile app if the merchant supports it. Bill-splitting and invoicing apps also incorporate bank payments. Even non-financial platforms (ride-hailing, utilities, subscriptions) are experimenting with allowing users to pay from linked bank accounts.
All these developments signal that pay-by-bank is rapidly becoming table stakes for merchants. Industry surveys show that nearly 60% of banks and over 90% of payment service providers are now offering, or plan to offer, pay-by-bank solutions. These providers cite strong merchant interest: in one report, over 90% of PSPs said retailers were asking about bank-transfer checkout.
The pace of adoption varies by region. Europe (especially the UK) leads thanks to open banking regulations. In the UK, for instance, data shows that roughly one-third of adults are now using some form of open banking service (such as budgeting apps or bank-initiated payments), with over 2 billion such payments in a recent month. Pay-by-bank options have seen explosive growth there. UK monthly pay-by-bank transactions jumped from about 15 million to 27 million in just one year.
This trend is similarly visible across Europe: countries that adopted PSD2 in 2018 have seen startups and banks launch pay-by-bank. In Scandinavia and the Netherlands, for example, A2A apps have long been popular; recently, more merchants in those countries have allowed customers to pay with banking app QR codes or bank transfers.
In the U.S., adoption has been slower but is picking up. Surveys find that only about 10-15% of U.S. consumers have ever used an account-to-account payment at checkout. Many Americans don’t know the option exists. Security concerns also play a role—more than half of non-users cite trust issues. However, attitudes are shifting: about 4 out of 5 consumers who have tried it report a positive experience.
The launch of FedNow in 2023 and fintech offerings (such as Plaid and Finicity, enabling account transfers) are accelerating the infrastructure. For example, direct debit via ACH has long been possible, but new, user-friendly flows (instant transfers via FedNow or tokenized account linking) are making A2A more practical for e-commerce. We should expect U.S. merchants to start rolling out these options more broadly in the next few years as the rails and consumer awareness improve.
Worldwide, forecasts anticipate that hundreds of millions of users will be using open-banking payments by the end of the decade. One study predicts a fourfold increase in active open-banking users over the next five years.
Governments and regulators in Asia and Latin America are also pushing real-time A2A systems, which should spur the adoption of bank-based checkout globally. India’s Unified Payments Interface (UPI) also saw rapid growth, and some Latin American countries have instant-transfer systems, albeit usually for person-to-person or bill payments for now. As these systems mature, merchants in those regions will likely follow suit with “pay-by-bank” at online checkout.
From a developer or fintech perspective, implementing open-banking payments involves new APIs and standards. Merchants or their payment providers must integrate with one or more open-banking gateways or directly with participating banks. The typical flow is: at checkout, the merchant calls an API to get a list of banks (or redirects to a single bank); the customer logs in to their bank’s interface; the bank returns an authorization token to the merchant; the merchant’s backend then triggers the actual transfer. Many third-party platforms handle all this complexity.
Key technical points include strong customer authentication and tokenization. Open-banking rules generally require multi-factor authentication, so the merchant never touches the customer’s credentials or one-time passcodes – they stay with the bank. The merchant only receives a token confirming the payment. The bank or network cryptographically signs this token (and other data), making it unforgeable.
Tokenization is also often used so that the account details themselves (like the account number) are never exposed outside the secure flow. From the merchant’s point of view, this means they don’t need to store sensitive card or bank data, reducing their compliance burden (for example, PCI scope).
On the user side, the process is usually made as seamless as possible: if on mobile, an app-to-app handoff occurs (the merchant’s app or browser opens the bank’s app); on desktop, a browser pop-up or redirect to a bank login page appears. Once the payment is confirmed, the merchant receives an immediate callback or webhook indicating success. Error handling is simpler than with cards: if the bank denies the payment (insufficient funds, incorrect credentials, etc.), the merchant is notified of a failed payment, and there is no lengthy chargeback dispute process.
The technology stacks behind open-banking payments are designed to reduce friction while maximizing trust. Banks invest heavily in secure APIs and fraud monitoring. Merchants work with PSPs that route payments to the “best rail” (e.g., fast rails if available, or regular ACH if not).
The result is an end-to-end system where the customer’s bank explicitly authorizes every transfer, and every step is logged and visible to both parties. For developers, this means using newer protocols (such as OpenID Connect and FAPI) and working with certified providers. But the payoff is a smooth, modern checkout flow that matches the security of banking apps.
Despite the benefits, open-banking payments are not a drop-in replacement for all card transactions—at least not yet. Some challenges include:
Most experts agree that these are surmountable. Many see parallels with how digital wallets took time to gain traction. As infrastructure (such as real-time rails and identity protocols) matures and more merchants begin offering pay-by-bank, it is likely to become a mainstream checkout option. Merchants should plan for the transition now, testing integrations in key markets and tracking adoption rates.
The migration from plastic cards to bank-based payments is well underway. Open banking has provided merchants with the foundation to accept account-to-account payments seamlessly and securely. The early results are precise: merchants who offer pay-by-bank at checkout are enjoying lower processing costs, faster cash flow, and far fewer fraud disputes. Even better, customers often appreciate the simplicity and trust of paying directly from their bank.
The industry is moving quickly. Platforms are building this capability into their core offerings, and surveys indicate broad demand from retailers for A2A checkout options. For e-commerce businesses, embracing open-banking payments could mean staying ahead of the curve. They stand to boost profit margins and improve the checkout experience simultaneously.
It’s an account-to-account (A2A) checkout where shoppers choose their bank, authenticate in their banking app/website, and approve a transfer. Funds move directly from the customer’s account to the merchant, no card networks involved.
There’s no interchange or scheme fee because cards are bypassed. Merchants typically pay a low, fixed, or reduced fee to the A2A provider, often cutting processing costs dramatically compared to the usual 1 to 3% on cards.
Payments are strongly authenticated by the bank (biometrics/OTP), reducing fraud risk. Since the customer authorizes a bank transfer, classic card chargebacks don’t apply; refunds are handled directly with the merchant.
A2A can settle instantly or same-day, depending on the rail (e.g., instant payments vs ACH). That means quicker cash flow and fewer authorization holds compared to traditional card settlement timelines.
Adoption is strongest in the UK/EU under open-banking rules, with growing global momentum. PSPs and networks (e.g., Revolut’s gateway features, Stripe’s pay-by-bank in Europe, and network-led open-finance initiatives) are rolling it out, with real-time rails expanding in markets like the U.S.
