Pay by Bank – should you use it?

How Pay by Bank works

It's JUST a bank transfer

Behind the scenes, Pay by Bank is a whizzy combination of two existing systems:

• Faster Payments. This is the default mechanism for bank transfers in the UK. When you use someone's sort code and account number to send them money from your current account, you're usually making a Faster Payment.

• Open Banking. Specifically, the bit of it called 'payment initiation' in industry jargon (different from the 'account information' type you may be familiar with). This removes the need for you to type in any account details to make the payment.

Because it's just a bank transfer behind the scenes, if you're using Pay by Bank to buy something, you have very limited refund protections compared to using a debit or credit card, as we explain below.

Millions use it already

In January 2026 alone, there were over 30 million successful Pay by Bank transactions in the UK, according to the latest available figures from the Open Banking industry body.

Currently, the most common uses for Pay by Bank are:

1. Moving cash between your own accounts with different providers. One common example is depositing money from your current account into a savings or investment account elsewhere. A host of providers support this, from Monzo and Zopa to Trading212 and Hargreaves Lansdown.

2. Paying certain bills. For example, your credit card – American Express now presents Pay by Bank as the default way to settle your balance on its mobile app, while other providers such as Lloyds also offer it. Meanwhile, HMRC collected over £12 billion in tax this way in 2024/25.

It's not (yet) a common option for other household bills such as energy, broadband, water, and so on – but it could be soon.

Why online retailers are adding Pay by Bank

Since we first started tracking the development of Pay by Bank in 2022 (when it was known as 'Open Banking account-to-account payments'), we've seen a very slow trickle of retailers adopting it.

In May 2024, trade body the British Retail Consortium told us it wasn't aware of any major brands offering it, citing barriers including lack of consumer awareness and the costs of setting it up.

But just a few months later, towards the end of 2024, Just Eat and Ryanair added the option to their checkouts – and with Amazon and eBay now on board, the trickle could turn into a flood.

One reason for this shift is that Pay by Bank service providers (the middlemen between retailers and banks, dealing with the technology behind the scenes) have been pushing hard to get retailers on board, promising higher sales and lower costs. One major provider touts "up to 50% lower fees" than cards, for example.

Beware: You lose key purchase protections when you Pay by Bank

As MoneySavingExpert.com founder Martin Lewis has pointed out, using Pay by Bank to buy things ISN'T the same as using it to move cash or pay bills (where you might have used a normal bank transfer anyway).

Writing on social media in January 2025, Martin warned shoppers to be careful – and his point is even more relevant now that Pay by Bank is rolling out more widely:

How Pay by Bank compares to paying on plastic

Retailers promoting Pay by Bank tend to play up the ease and convenience of this new way to pay, but there's more to consider before you switch over – here are the main pros and cons:

Pay by Bank wins for...

• Convenience. With no need to enter any details manually, Pay by Bank really is quick and easy – especially if you have your banking app set up to use your face or fingerprint.
  
  (Though, frankly, cards aren't far behind these days – if you have your card details saved in your web browser, or you use a digital wallet, such as Apple Pay or Google Pay, paying by card can be just as smooth.)

• Potentially quicker refunds. Retailers can send money back the way it came – meaning it can land in your account almost instantly, versus the two to five days it can take with cards. Amazon, for example, promises your money back "within minutes" after it's verified your return.

• Budgeting certainty. With Pay by Bank, money leaves your account immediately, so you can trust that the balance you see is exactly what you have left to spend. Meanwhile, card payments often sit as 'pending' for a few days, which can muddy the waters if your bank or card provider doesn't do a good job of displaying your true balance.

But cards are still best for...

• Purchase protections. This is the big one. Credit cards give you powerful Section 75 protection on items that cost over £100 (and no more than £30,000), meaning the bank has a LEGAL responsibility to help if something goes wrong with the purchase.
  
  Then there's chargeback, which works on credit AND debit cards. While this isn't a legal right, it's part of American Express, Mastercard and Visa's rules, and it can help you get your money back if the retailer won't refund you.
  
  With Pay by Bank, all you have are the retailer's own policies and your normal 'SAD FART' consumer rights – and enforcing these can be tricky if the retailer won't play ball or has gone bust. This means that if something goes wrong with a Pay by Bank purchase, you're essentially on your own.
  

  Purchase protections compared

  Payment method	What happens if a retailer won't help (or goes bust)
  Credit card	You can ask your card provider for a refund through Section 75 (provided the item cost £100.01+) AND under chargeback rules – see our detailed chargeback vs S75 comparison.
  Debit card	You can ask your bank for a refund under chargeback rules.
  Pay by Bank	Chargeback and Section 75 don't apply. Your only options are to: - Escalate your complaint to an alternative dispute resolution (ADR) scheme, if the retailer is part of one. - Make a small claim in the courts. - If it's gone bust, register as an 'unsecured creditor' with the administrators and hope for the best.

• Rewards, cashback and perks. Use the right debit or credit card and you can get PAID to spend. Our current top pick pays 1% cashback on almost everything – meaning £1,000 a month of family spending can earn you £120 a year (provided you pay it off IN FULL).
  
  Pay by Bank has no equivalent schemes right now, though this could change in future. As it's cheaper for retailers than taking card payments, we could start to see some of that saving passed on to shoppers in the form of offers and discounts.

Coming soon: Pay by Bank subscriptions

Right now, most Pay by Bank transactions are one-off: every time you pay, you're redirected to your bank to approve that specific payment.

But the next phase – called 'Variable Recurring Payments' (VRPs) – is about making Pay by Bank work more like recurring card payments and Direct Debits. Here, instead of approving every single payment, you set up an ongoing permission (mandate) for a particular firm or organisation to take money from your account, within certain limits.

Any VRPs would be listed clearly in your in-app or online banking, alongside the option to cancel them – giving you more visibility and control compared to recurring card payments, which can be tricky to spot (and stop).

Eventually, this could be used for utility bills, online subscriptions (Amazon says you'll soon be able to pay for Prime this way, for example), or even 'one-tap' shopping. Initially, however, it's set to be rolled out for payments considered to be 'low risk' – those to regulated financial services providers, regulated utility firms and local and central Government.

It's still unclear what consumer protections, if any, will apply to these types of payment – different approaches have been proposed, from mimicking debit card chargeback rights, to only covering cases of fraud, to having different rights depending on what the payment was for. We're following this closely and we'll update this guide as more info emerges.