Of the several payment methods that have been powered by Open Banking, none more so have taken off in popularity than Pay by Bank.
With more than 15 million users and processing over 27 million transactions per month, according to TrueLayer, Pay by Bank is taking shape as one one of the largest emerging alternative payment methods… so why is there so much scepticism?
Lena Hackelöer, Founder & CEO, Brite Payments, writes for Payment Expert to bust a few myths regarding Pay by Bank and why merchants and consumers are still yet to wholly adopt the payment method. She also emphasises the security parameters of Pay by Bank, its conversion rates and consumer protections.
In fintech, speed is everything, whether that be the speed of innovation, the speed of payments or the speed of user experience. However, when it comes to consumer understanding, perceptions often lag far behind reality.
Instead of framing this as a gap in awareness, we see a positive opportunity to make the benefits of new solutions like Pay by Bank clearer and more accessible.
Pay by Bank, also known as account-to-account (A2A) payments, is fast becoming a mainstream payment method, built on robust infrastructure and designed for the mobile-first digital economy. Yet still, myths persist, so let’s take a moment to address some of the most persistent myths surrounding this payment method.
Myth 1: Pay by Bank Lacks Consumer Protections
One of the most common misconceptions, particularly in markets like the UK, is that Pay by Bank doesn’t protect consumers. The assumption is often that users are exposed without credit card-style chargebacks or Section 75 protections. However, this narrative is misleading.
Pay by Bank operates under PSD2, one of the most rigorous regulatory frameworks in financial services. Every transaction requires Strong Customer Authentication (SCA), such as biometric checks, app-based approvals or tokenised flows. This means users remain firmly in control of every payment, and fraud risk is significantly reduced.
Unlike card-based payments, Pay by Bank doesn’t rely on transmitting sensitive information like card details. Instead, it uses secure and direct connections to a user’s bank and app-based approvals. This means there are no reusable credentials to steal and far fewer opportunities for data breaches.
When it comes to refunds, modern Pay by Bank solutions can actually speed up the process. With clearly defined refund policies and no reliance on traditional chargeback processes, merchants can resolve disputes faster and more transparently. At Brite Payments, we take this further by only onboarding merchants that meet strict KYC and AML compliance, reducing the likelihood of disputes in the first place.
Myth 2: It’s Too Risky for Large Transactions
There’s a lingering belief that Pay by Bank is only suitable for everyday purchases, like online shopping or streaming subscriptions. However, it is designed to be well-suited to big-ticket purchases. The real risk in any large transaction isn’t the payment method but the credibility of the merchant. With trusted merchants, Pay by Bank offers a faster, safer, and more reliable path than many legacy methods today.
Traditional card payments can fail on large purchases due to credit limits, expired cards or fraud prevention flags. Add to that the delay between authorisation and settlement, and both consumers and merchants face uncertainty.
With Pay by Bank, transactions are either confirmed instantly or they don’t proceed at all. This level of certainty matters when you’re booking a holiday or putting down a deposit. Combined with direct-from-source authentication, regulatory oversight and trusted merchants, Pay by Bank offers a solid level of security and reliability for high-value transactions.
Myth 3: It’s Less Secure Than Cards
Security concerns are natural, especially when consumers are unfamiliar with a payment method. Cards have been around for decades, and that familiarity creates a sense of safety.
Pay by Bank isn’t just as secure; it’s arguably more secure by design.
Credit cards can be lost, stolen, or skimmed, and fraudsters can reuse card numbers across multiple sites. Pay by Bank avoids these vulnerabilities entirely, as no card details are stored, and sensitive information is not stored. Transactions are initiated through the user’s own banking app, with encryption and multi-layer authentication built in.
This dramatically reduces the attack surface for fraudsters, and because Pay by Bank eliminates the need for third-party intermediaries storing payment credentials, the likelihood of data compromise is significantly lower. For scenarios where security and control are important, Pay by Bank offers a compelling alternative.
Myth 4: Conversion Rates Are Poor
Early open banking experiences were clunky, with too many redirects, confusing interfaces, and poor UX, which led to drop-offs, but that was then. Today, technology has come a long way, and Pay by Bank now delivers a seamless, mobile-first experience.
The process is straightforward, with no forms, card entry, or redirects. Payments happen directly through the user’s banking app, authenticated with a fingerprint or face ID. Returning customers can complete transactions in seconds, making it as fast as or faster than established payment methods.
In conversion-critical sectors like eCommerce and travel, this streamlined experience means fewer declines, no expired card issues, and instant settlement. Our own Instant Economy Payments Insights report found that 42% of regular Pay by Bank users choose it for speed and 46% for security.
That said, conversion isn’t just about the method; it’s about implementation. A poor UX will hurt performance regardless of how you pay. But when Pay by Bank is well-integrated, particularly in mobile environments, it becomes a highly intuitive and efficient option for both consumers and merchants.
Why Clarity Matters Now
Payments should be invisible, working securely and instantly without the consumer worrying about the mechanics behind them. Pay by Bank aligns perfectly with this vision of being fast, safe and built for a mobile-first era. However, as myths persist, it results in slowing adoption.
As an industry, we have a responsibility to correct these misconceptions. It’s not enough to build better solutions; we need to communicate the benefits clearly. That means helping consumers understand the security, protections and performance of Pay by Bank and supporting merchants with the right tools and integrations to deliver seamless payment experiences.
The reality is, Pay by Bank is smart, regulated, efficient and increasingly the preferred choice for consumers who value control and simplicity. It’s time the conversation caught up with the facts.
