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When Amazon added Pay by Bank as a checkout option in the UK earlier this year, it was a huge seal of approval. So did eBay, Just Eat, Papa John’s, and Ryanair. Over 30 million successful Pay by Bank transactions were processed in January alone, according to Open Banking Limited. A payment method that was barely visible to most consumers two years ago is now embedded in some of the world’s most used platforms.
Consumers thinking carefully about how and where they spend money online, this is worth understanding.
The Basics
Pay by Bank is a payment method that moves money directly from your bank account to a merchant, authorized through your own banking app using Face ID, fingerprint, or a secure passcode. No card number is entered. No card details are stored by the merchant. The money moves instantly via the UK’s Faster Payments network. Open Banking Limited’s Pay by Bank explainer sets out the full technical framework. The key consumer difference from a card payment is that your card number is never in the transaction at all, which removes one of the most common vectors for payment fraud.
The fraud data supports that distinction. Open Banking fraud rates ran at 0.013% of transactions between March 2024 and September 2025, compared to the 0.045% industry average for card payments. That is not a marginal improvement. It is a structural one, driven by the fact that biometric authentication happens inside the bank’s own app rather than on a merchant’s website.
The Regulation Behind It
Pay by Bank is not a commercial product launched by a fintech company. It is built on Open Banking, the regulatory framework that the Competition and Markets Authority mandated in 2016 and that has been progressively built out since. The Data Use and Access Act, passed this year, embeds Open Banking within a new smart data framework, giving regulators greater flexibility to expand its use into areas beyond payments, including SME lending, pensions, and insurance.
Around 1,000 councils, police services, and armed forces organisations are also moving to Pay by Bank via GOV.UK Pay, following HMRC’s adoption of it for tax payments in 2021. The institutional adoption signals that this is infrastructure, not a trend.
Where It Is Being Used Beyond Retail
The consumer applications stretch beyond retail checkout. Licensed online platforms across entertainment and leisure, including those offering paying with mobiles on different casino games, have been among the earlier adopters of Pay by Bank precisely because the security model suits real-money transactions. No stored card details means no card data to compromise. Instant settlement means deposits and withdrawals are clear without the delays that card networks sometimes introduce. For consumers who use these platforms and are thinking about their financial security, Pay by Bank removes the card exposure risk that makes many people uneasy about entering payment details online.
Variable Recurring Payments (VRPs), which allow consumers to authorise flexible recurring payments directly from their bank accounts, are expanding through 2026. These are already live for investment platforms and rent payments and will extend further as the UK Payments Initiative rolls out its commercial VRP scheme. The practical effect is that more categories of regular spending will move to direct bank authorisation, away from card mandates.
What to Watch in the Second Half of 2026
The Open Banking ecosystem now covers more than 15 million UK users and is growing. The Amazon deployment is the most significant retail validation the system has had, and its influence on other major retailers adopting the option will be visible through the second half of this year.
For consumers managing debt or working to a tight budget, Pay by Bank has a practical advantage that card payments do not: you see your real bank balance before authorising the payment, and the money leaves your account immediately rather than accumulating on a card statement. There is no credit buffer, no hidden debt building between purchase and statement date. For anyone tracking spending to manage debt, that visibility is more useful than it might first appear.
The underlying direction is clear. Pay by Bank will not replace cards overnight, but the trajectory from HMRC in 2021 to Amazon in 2026 took five years. The next five look considerably faster.
