Pay by Bank (Open Banking) vs Card Payments in the UK (2025)

For years the UK checkout has looked the same: card first, maybe PayPal, then a handful of wallets. Open Banking payments are changing that. They move money directly from a customer's bank account to yours, skipping card networks and their fees. It is not a silver bullet, but used in the right places it lowers costs and can improve conversion for specific orders.

This article compares Pay by Bank and cards in plain terms and shows where each method wins so you can deploy both with confidence.

Fees and the Real Cost of a Payment

Card fees are familiar: a percentage plus a fixed amount, plus scheme fees and chargeback risk. If you sell low-price items, the fixed element bites. If you sell high-value items, the percentage hurts. Open Banking fees are usually a flat fee per payment or a small percentage with a cap, and there are no card scheme fees. For high-value orders, Pay by Bank can be substantially cheaper.

However, cards still bundle perks such as instant refunds, authorisation retries and wide consumer trust. The effective cost of a card payment can be lower if these perks lift conversion in your niche.

Conversion: When Each Method Wins

• Impulse purchases and subscriptions: cards win because people know them and they work everywhere.
• High-value one-off orders: Pay by Bank often converts as well as cards if you explain the benefit (secure bank transfer, no card limits) and keep the flow to two taps.
• B2B invoices: Pay by Bank is attractive when buyers dislike corporate cards or limits. It also reduces late payments with smart reminders and deep links to initiate payment.

Fraud, Chargebacks and Risk

Card not present fraud is a tax on e-commerce. SCA reduced it, but chargebacks still consume time. Pay by Bank has no traditional chargebacks because the customer authorises the transfer with their bank. That removes entire classes of fraud. The trade-off is that customer support needs a playbook for mistaken payments and manual refunds.

Refunds and Reconciliation

Cards shine for instant partial refunds and simple reconciliation. Pay by Bank refunds depend on your provider: some offer API refunds back to the source account, others require a manual bank transfer. In all cases, plan for how you will match payouts to orders in your accounts.

Implementation Options

• Stripe: Use Payment Element for cards and enable bank transfer or Open Banking features where available. Good if you already run Stripe and want one dashboard.
• GoCardless: Well known for bank payments; good documentation and reliable reconciliation, especially for B2B.
• TrueLayer: Strong Open Banking coverage and good hosted flows that reduce PCI and security concerns.

Where to Place Pay by Bank in the Flow

Position matters. For retail checkouts, keep cards first and add Pay by Bank as a clear secondary option with a short note: "No card limits, secure bank transfer". For B2B invoices, make Pay by Bank the first option in the payment link and show the card button underneath.

Security and Compliance

With Open Banking you do not touch credentials; the customer authenticates with their bank. Choose a provider that handles the sensitive parts and gives you signed webhooks. For GDPR, store only what you need: payer name, last four of account where necessary, timestamps and references for reconciliation.

A Simple Rollout Plan

1. Start with invoices or high-value baskets where the fee saving is obvious.
2. Measure conversion separately for card and Pay by Bank.
3. Add gentle incentives for Pay by Bank on orders over a threshold.
4. Train support on refunds and how to help customers finish authentication with their bank app.

The Bottom Line

Cards are universal and will remain your default. Pay by Bank is a powerful second rail that reduces costs and removes chargeback pain. Offering both gives customers choice while improving your margin on the orders where it matters most.

Want help adding Pay by Bank without hurting conversion? DevsMint integrates card and Open Banking flows with clean reporting so your finance team stays happy.