A Business Guide to Pay by Bank in the UK

Picture this: a payment method that works like a secure, digital cheque, clearing in an instant without you ever having to read out your card number. In essence, that's Pay by Bank. It lets your customers pay you directly from their bank account, creating a brilliantly simple and much safer transaction for everyone.

What is Pay by Bank and Why is it Taking Off?

Pay by Bank is a payment method that uses open banking technology to let a customer kick off a payment straight from their bank account to a business. Unlike the old ways, it completely does away with the need to type in long card numbers, expiry dates, or those little three-digit security codes. Instead, it creates a secure, pre-approved link between the customer's bank and the business's account.

Think of it as a highly secure digital handshake. When a customer chooses to pay this way, they're whisked away to their own familiar banking app or online portal. The best part? All the payment details, like the amount and who they're paying, are already filled in. The customer just needs to approve it with their usual login method—a fingerprint, Face ID, or a password. Done. The money moves almost instantly.

This simple process neatly solves several headaches that come with traditional payment systems. It completely removes the risk of handling and storing sensitive card information, which is a huge weight off the shoulders of any business, especially those with contact centres. By sidestepping the card networks entirely, it provides a more direct, efficient, and often cheaper way to get paid.

The Link to Open Banking

The engine making all this possible is the open banking revolution. This is the regulatory framework that gives trusted third-party providers secure access to customer banking data (with their permission, of course). Grasping the details of the ongoing open banking revolution is key to understanding why Pay by Bank is becoming so popular right now. It's this very framework that enables that secure "digital handshake" between a business and a customer's bank.

Pay by Bank isn't just another button on the checkout page; it’s a fundamental change in how money moves. It puts security, speed, and simplicity first, steering us away from the inherent risks of card-based payments.

This technology has quickly gone from a novel idea to a mainstream payment choice here in the UK. Its growth has been nothing short of explosive, hitting a massive 27 million transactions every month by early 2025, with nearly nine million Brits now using it regularly.

Even more impressive is that the user base is growing by one million new people every month, a clear sign of a major shift towards direct bank transfers. This trend is particularly significant for contact centres that take payments over the phone or via web chat, as it means agents never have to see or handle sensitive customer data again. You can read more about the findings on Pay by Bank adoption to see the full picture.

How Does a Pay by Bank Transaction Actually Work?

To really get why Pay by Bank is such a big deal, it helps to lift the bonnet and see what’s going on behind the scenes. It might sound technical, but the whole process is built for simplicity and rock-solid security. It creates a seamless journey for the customer and a virtually risk-free one for your business.

At its core, think of it like a secure digital courier. Instead of you handling sensitive card details, this courier carries a pre-approved payment instruction straight from the customer’s bank to yours. This instruction has everything needed to complete the payment, but crucially, it never shares the customer's personal financial data with you.

This secure conversation happens through APIs (Application Programming Interfaces). These are just the digital rails that let different banking systems talk to each other safely, all under the strict rules of open banking. A licensed third party called a Payment Initiation Service Provider (PISP) acts as the trusted middleman. Regulated by the Financial Conduct Authority (FCA), the PISP is the one that securely kicks off the payment for the customer.

The Customer Journey, Step by Step

So, what does this actually look like for the person paying? It’s surprisingly simple—usually just a couple of taps on their phone.

1. Choose ‘Pay by Bank’: At checkout, on a payment link, or over the phone with an agent, the customer selects the 'Pay by Bank' option.

2. Select Their Bank: A list of UK banks appears. They simply tap on their own bank, which securely redirects them to their bank's familiar, trusted app or online portal. They never enter details on your site.

3. Log in Securely: The customer is prompted to log in to their banking app just like they always do—using their fingerprint, Face ID, or a unique password. It’s a process they already know and trust.

4. Confirm the Payment: Once they’re in, a pre-filled payment summary pops up. It clearly shows your business name as the recipient and the exact amount to be paid. There's nothing for them to type in, which completely gets rid of typos and other human errors. They just check the details and hit 'confirm'.

This entire flow feels safe and familiar because the customer approves everything from inside their own bank's secure environment.

The diagram below breaks it down visually, showing just how secure, instant, and simple the process is.

The key thing to remember is that you, the merchant, are never exposed to any sensitive customer data. The authentication happens directly between the customer and their bank.

Security That’s Baked In: Strong Customer Authentication

The integrity of this whole process rests on a critical piece of regulation called Strong Customer Authentication (SCA). This was brought in under the UK's version of the second Payment Services Directive (PSD2) with one goal: to stamp out online payment fraud.

SCA demands that a payment is verified using at least two of these three factors:

• Knowledge: Something only the customer knows (like a password or PIN).
• Possession: Something only the customer has (like their smartphone).
• Inherence: Something the customer is (like their fingerprint or face).

Pay by Bank ticks these boxes automatically. The customer logs into their banking app (possession) and then authorises the payment with a password (knowledge) or a biometric scan (inherence). It’s SCA compliant by its very nature.

This built-in, multi-factor authentication makes every single transaction incredibly secure from the get-go. It’s a world away from traditional card payments, which often rely on static details like a card number and CVC—information that’s all too easy for fraudsters to steal and reuse.

This inherent security is a game-changer. It means you can accept payments with confidence, knowing the risk of fraud is practically zero. It’s also why Pay by Bank payments aren’t subject to chargebacks; the payment is authenticated and pushed directly by the customer.

Once confirmed, the money is sent irrevocably via the Faster Payments Service, landing in your account almost instantly. This powerful combination of iron-clad security and immediate settlement offers a level of peace of mind that older payment methods just can't match.

Why Your Business Needs to Consider Pay by Bank

Beyond all the technical jargon, what does switching to Pay by Bank actually mean for your business? It’s a fair question. This isn't just about adding another logo to your checkout page; it's a strategic move that directly impacts your finances, your security, and your relationship with your customers.

The argument for making the switch is built on three solid pillars: slashing costs, bolstering security, and delivering a far better customer experience.

Let's break down how this technology tackles the everyday headaches that come with traditional payment methods, offering a smarter, more efficient way to get paid.

Drastically Lowering Transaction Costs

Every business knows that the cost of getting paid is a constant drain on resources. Card payments, with their tangled web of interchange, scheme, and acquirer fees, chip away at your profit margins. This is especially true if you handle a high volume of sales or large transaction values.

This is where Pay by Bank delivers its most immediate and powerful punch.

By connecting a customer's bank directly to yours, it completely sidesteps the expensive card networks. This isn’t a small tweak—it fundamentally rewrites the cost model. Instead of a percentage-based fee on every sale, you’re looking at a much lower, often fixed, fee for each transaction.

The impact on your bottom line can be huge. For a business processing thousands of payments a month, moving from a 1.5% card fee to a flat fee of just a few pence can unlock thousands of pounds in annual savings.

That's not just pocket change; it's a significant financial lever. The money saved can be funnelled back into what really matters—improving customer service, upgrading technology, or boosting your marketing efforts. To see what this could look like for you, our payment processing savings calculator can give you a clear estimate.

Fortifying Security and Eliminating Fraud

Card-not-present (CNP) fraud is a constant, costly battle for businesses. It leads to lost revenue, operational nightmares, and erodes the trust you’ve built with your customers. On top of that, the chargeback system, while designed to protect consumers, is often exploited, leaving you to foot the bill.

Pay by Bank is designed from the ground up to make these problems a thing of the past.

• No More Chargebacks: Every payment is authenticated by the customer, directly inside their own banking app, using Strong Customer Authentication (SCA). This makes it a verified "push" payment, rendering fraudulent chargebacks virtually impossible.

• Eradicates CNP Fraud: Because no sensitive card details are ever shared, stored, or typed into a website, the risk of data breaches and CNP fraud is completely removed from the equation.

• Enhanced Identity Verification: For high-value transactions like insurance payouts or financial settlements, identity verification can be built right into the payment flow. This ensures you’re paying the right person, every single time.

This powerful security model is a game-changer for contact centres. When an agent helps a customer pay by bank, they never see or handle any sensitive financial data. This instantly lowers your risk profile and makes complying with standards like PCI DSS far simpler.

A Quick Comparison

To put it into perspective, here’s how Pay by Bank stacks up against the payment methods you’re probably using right now.

Pay by Bank vs Traditional Payment Methods

Feature	Pay by Bank	Card Payments	Bacs Direct Debit
Transaction Fees	Low, often a fixed fee	Percentage-based (e.g., 1.5% + 20p)	Low, fixed fee per transaction
Chargeback Risk	Virtually zero	High (CNP fraud)	Present (indemnity claims)
Payment Speed	Instant / Near-instant	2-3 business days	3-5 business days
Customer Experience	Seamless, mobile-first, no data entry	Manual entry of card details	Requires mandate setup
Security	Strong Customer Authentication (SCA)	3D Secure, CVC checks	Mandate verification
Data Exposure	No financial data shared	Card details are shared and stored	Bank details shared for setup

As the table shows, Pay by Bank combines the low-cost benefits of bank transfers with the speed and security that modern customers expect, leaving older methods behind.

Creating a Superior Customer Experience

In today’s market, a clunky payment process is a deal-breaker. Slow, confusing, or awkward checkouts lead directly to abandoned carts and unhappy customers. Pay by Bank offers a sleek, mobile-first experience that is fast, simple, and reassuringly secure.

The journey is incredibly smooth. A customer can pay in just a few taps on their phone—no more hunting for a wallet to type in a 16-digit card number, expiry date, and security code. This convenience is a proven way to boost your conversion rates.

Think about these real-world scenarios:

• Simplified IVR Payments: A customer can pay a bill over the phone via an automated system. It sends a secure link to their mobile, they approve it in their banking app, and it’s done. This cuts down call times and frees up your agents.
• Instant Insurance Payouts: An insurance firm can securely pay out a claim directly into a verified customer's bank account in seconds. At a critical moment, this builds immense trust and goodwill.

The rapid growth across the UK tells its own story. The UK's embrace of Pay by Bank is fuelling a 53% year-on-year surge in open banking payments, with over 16 million users. Variable Recurring Payments (VRPs) already make up 16% of these transactions, offering smarter, flexible debits—perfect for support teams using platforms like Paytia to handle payments over voice and video.

With 27 million monthly transactions and nine million regular monthly users, it’s no surprise that 90% of e-commerce merchants with over £1m in revenue plan to implement it. This isn't just a trend; it's a clear signal that customers not only trust this method but actively prefer its blend of simplicity and security.

Making Sense of Security and Compliance

Whenever you bring a new payment technology into your business, you've got to know the rules of the road. For Pay by Bank, that road is paved with robust regulations designed to protect everyone involved—your business and your customers. This makes things safer, but it also brings up some important questions about compliance, especially for contact centres.

The whole system operates under the UK's Open Banking framework and Europe's second Payment Services Directive (PSD2). One of the biggest parts of PSD2 is Strong Customer Authentication (SCA), which, as we’ve discussed, is baked right into the Pay by Bank process. This built-in security means every single transaction is confirmed directly with the customer’s own bank, which cuts down fraud risk dramatically.

It's this reliance on bank-grade security that makes the whole thing so trustworthy. The responsibility for authenticating the payment shifts away from you and onto the financial institutions that live and breathe security. The result is a much safer payment journey for everyone.

What About PCI DSS?

This is where people often get a bit confused. The big question is: does the Payment Card Industry Data Security Standard (PCI DSS) apply? Since a Pay by Bank transaction doesn’t involve any card details—no 16-digit number, no CVC, no expiry date—the transaction itself is completely outside the scope of PCI DSS. That's a huge win, as it strips away a major layer of compliance hassle for those payments.

But, and this is a big but for contact centres, there’s a crucial distinction to make.

Even though the Pay by Bank transaction is out of scope, your contact centre environment probably remains in scope if you still take card payments over the phone or any other channel. If card data touches your systems at any point, PCI DSS still applies to your infrastructure and processes.

So, you can't just forget about PCI DSS. The smart move is to use a secure, all-in-one payment platform that can handle both Pay by Bank and card payments in a single, compliant bubble. This way, you close any potential security gaps and make managing your compliance much simpler. Even if you're not in Australia, understanding frameworks like the PCI compliance standards in Australia can provide useful context on how seriously data security is taken globally.

How the Right Platform Eases Your Compliance Load

This is where finding a good technology partner really pays off. A unified payment platform doesn’t just add a new payment method; it can significantly lighten your entire compliance burden across the board.

Here’s how a proper solution helps you stay on the right side of the rules:

• Centralised Security: It wraps a protective layer around all your customer interactions, whether someone pays by card or by bank. This stops you from having fragmented security policies and creating weak spots.
• Scope Reduction: The best platforms ensure that sensitive card data never even enters your contact centre environment, using clever tech like DTMF masking for phone payments. This alone can shrink your PCI DSS scope by as much as 90-95%.
• Meeting Broader Standards: Good compliance isn't just about payments. A solid platform will also be built to meet other critical standards, such as GDPR, and hold key certifications like Cyber Essentials Plus.

Taking this kind of holistic approach means you can give your customers more choice without giving yourself a compliance headache. You can confidently offer Pay by Bank knowing that your card payment processes are still locked down and fully compliant. To really get to grips with what’s required, it’s worth learning more about the different PCI levels of compliance and what they mean for your day-to-day operations.

At the end of the day, adding Pay by Bank through a secure platform is more than just a new feature. It’s an upgrade to your entire security and compliance setup that protects your customers' data and builds the kind of trust that keeps them coming back.

Integrating Pay by Bank into Your Contact Centre

Introducing a new payment method into a bustling contact centre environment is something that needs a bit of planning. It’s not about just adding another button to a screen; it’s about making the entire process smoother for your agents and far more secure for your customers.

The real goal is to weave pay by bank so seamlessly into your operations that it feels like it’s always been there. You want it to be a natural, intuitive part of the conversation, whether your agents are helping someone on the phone, over a video call, or through web chat. Get it right, and you’ll see the benefits from day one with minimal disruption.

Assessing Your Current Systems

Before you can add anything new, you need to take stock of what you’re already working with. Start by looking at your current payment systems, your telephony setup (be it a PBX or VoIP system), and the CRM software that holds everything together. The first step is always understanding how these different pieces of tech currently talk to each other.

This is where a good technology partner becomes invaluable. Instead of starting from scratch with a costly, custom-built solution, look for a turnkey platform designed to plug straight into the tools you already rely on. The right platform will act as a central hub, cleanly connecting your telephony, CRM, and payment gateways into one secure, streamlined system.

Choosing Your Integration Path

Once you’ve got a handle on your existing setup, you can decide exactly where and how to introduce pay by bank. A flexible payment platform won't force you into a one-size-fits-all approach. It will let you deploy this new option where it will make the most significant difference.

Here are a few of the most effective ways to integrate it into a contact centre:

• Agent-Assisted Payments: Imagine your agent generating a secure payment link in real-time. They can send it directly to the customer via SMS, email, or even within a web chat. The customer just clicks the link, authenticates the payment with their face or fingerprint in their banking app, and your agent gets an instant confirmation. The conversation keeps flowing, and no sensitive data is ever spoken or shared.
• Automated IVR Flows: For straightforward, recurring payments like settling an outstanding bill, you can set up a self-service Interactive Voice Response (IVR) journey. The customer can handle the entire pay by bank transaction on their own, which frees up your agents to deal with more complex, value-adding enquiries.
• Web Chat and Video Calls: Customer service isn't just about phone calls anymore. A truly versatile solution lets agents trigger payment requests directly inside a chat window or during a video call, creating a single, unbroken experience for the customer.

By choosing a platform that supports these different scenarios, you can roll out pay by bank strategically. To see how this is reshaping customer conversations, you can explore more on secure payment solutions for contact centres.

The Implementation Checklist

To make sure your rollout is a success, a simple, structured plan is your best friend. A good checklist keeps the project on track and ensures you’ve covered all the bases, from the technical nuts and bolts to getting your team up to speed.

Here’s a practical checklist to guide you:

1. Define Your Goals: First, ask yourself what you want to achieve. Is it all about lowering transaction costs? Reducing fraud risk? Or improving the customer journey? Having clear goals makes it easy to measure success later on.
2. Select a Technology Partner: Go with a provider who has real-world experience in both secure payments and contact centre integrations. Check that they hold key certifications like PCI DSS Level 1 and Cyber Essentials Plus.
3. Map Your Workflows: Work with your new partner to map out exactly how pay by bank will fit into your agents' existing scripts and your typical customer interaction flows.
4. Configure and Test: Time to get everything connected. Set up the integrations with your PBX, CRM, and payment gateways, then test everything thoroughly to make sure it’s all working flawlessly before launch.
5. Train Your Team: The process is designed to be simple, but it’s still crucial to brief your agents. Explain the new option and its benefits so they can offer it to customers with confidence.
6. Launch and Monitor: Go live! You might want to start with a phased rollout. Keep a close eye on transaction success rates and gather feedback from both agents and customers to fine-tune the process.

By following these steps, you can introduce pay by bank as a valuable tool that not only cuts costs and boosts security but also genuinely enhances the overall service you provide to your customers.

Time to Rethink Your Payments?

So, where do you go from here? Getting started with Pay by Bank is about more than just adding another button to your checkout page. It’s a genuine shift in how you handle money—one built on solid security, slick efficiency, and the kind of trust that only a customer’s own bank can provide. For any business, but especially those in regulated fields or running busy contact centres, the benefits are compelling.

This isn't just a minor tweak; it's a direct solution to the headaches that come with traditional card payments. You’re sidestepping the hefty card scheme fees, which immediately cuts your transaction costs. At the same time, you're practically slamming the door on card-not-present fraud and the endless pain of chargebacks, because every single payment is verified directly within the customer's banking app.

What to Do Next

Making the move to Pay by Bank is a smart, strategic play with a clear return. The trick is finding the right partner to weave this technology into your daily operations without causing disruption.

As you weigh up your options, keep these core advantages in mind:

• Fraud Becomes a Non-Issue: Because Strong Customer Authentication is baked into every transaction by default, the opportunity for fraud all but disappears.
• Costs Come Down: Imagine swapping unpredictable, percentage-based card fees for a simple, low fixed fee per transaction. That difference goes straight to your bottom line.
• Compliance Gets Simpler: When you no longer have to handle or store sensitive card details, you can dramatically shrink your PCI DSS scope. That means less complexity and less cost.

In the end, adopting Pay by Bank is about preparing your business for the future. It brings you in line with what customers now expect: payments that are instant, secure, and hassle-free. It’s simply a better way to get paid.

Take a moment to look at your current payment setup. Think about the time wasted on manual reconciliation, the money lost to high fees, and the constant worry of fraud. A modern, secure payment platform can integrate this technology for you, helping you make a smooth transition and see the benefits almost immediately.

See how Paytia can help you get started with smarter, safer payments today.

Got Questions About Pay by Bank? We Have Answers.

As businesses start looking at smarter ways to get paid, a few practical questions always pop up. Pay by bank is refreshingly simple, but getting to grips with the details is key to understanding how it can really benefit your operations. Let's walk through the most common queries.

Is Pay by Bank Just a Fancy Name for a Bank Transfer?

Not at all—they're worlds apart in practice. A manual bank transfer puts all the work on the customer. They have to leave your payment journey, log into their bank, and then manually type in your sort code, account number, the exact amount, and a payment reference. It's clunky, slow, and a prime spot for typos that cause payment errors and reconciliation headaches for your team.

Pay by bank, on the other hand, uses open banking to handle all of that automatically. It prepares the entire transaction behind the scenes. All the customer has to do is tap to open their trusted banking app and approve the payment with a fingerprint or Face ID. The whole process is faster, far more secure, and completely free of human error.

How Quickly Does the Money Actually Arrive?

This is where pay by bank really shines. Transactions almost always travel on the UK's Faster Payments Service (FPS). This means the funds land in your business bank account almost instantly—we’re talking a matter of seconds after the customer authorises the payment.

This near-instant settlement is a massive boost for cash flow. It completely sidesteps the typical two-to-three-day delay you get with card payments, giving you immediate access to your revenue.

That kind of speed is a game-changer for time-sensitive transactions or simply for improving your company's overall financial agility.

What if a Customer Doesn’t Use a Mobile Banking App?

While the mobile app experience is incredibly smooth, it’s not the only way. Pay by bank works just as well for customers who prefer to manage their finances on a desktop or laptop computer.

When they choose to pay, they're simply redirected to their bank's official website to log in securely and approve the payment. Since the vast majority of UK consumers use either mobile or online banking, this dual approach has you covered. And for the small number who don't, you can always offer another secure payment option to make sure no one is left out.

How Does This Affect Our PCI DSS Compliance?

This is a big one for any business that takes payments. Because pay by bank doesn't touch any card details whatsoever—no card number, CVC, or expiry date—the transactions themselves fall completely outside the scope of the Payment Card Industry Data Security Standard (PCI DSS).

But here’s the critical thing to remember: if your contact centre also takes card payments, your business environment as a whole remains in scope for PCI DSS.

The smartest move is to use a single, PCI DSS certified platform that can securely manage all your payment methods. This unified approach gives your customers choice while making your own compliance obligations simpler and your security stronger across the board.

Paytia provides a unified, secure platform to help your business adopt Pay by Bank alongside traditional card payments, all within a PCI DSS compliant environment. Discover how you can lower costs, eliminate fraud, and improve customer trust by exploring our solutions at https://www.paytia.com.