Pay by Bank payments explained: Step-by-step guide
Pay by Bank simplifies the checkout experience by letting customers pay through their banking app. This fast, convenient and secure payment option is winning over the UK and Northern European markets.
Let’s take a look at how it works, step by step.
The principle behind Pay by Bank
Pay by Bank is an instant bank transfer powered by open banking. This method moves money directly between banks, without cards or extra intermediaries.
It works through Application Programming Interfaces (APIs), which pass payment details between systems in real time. For customers, it means paying straight from their own bank app, quickly and safely.
The system relies on collaboration between three financial entities:
Banks provide user-friendly and secure digital banking services.
Payment service providers act as middlemen, managing technical integrations so you can accept payments from different banks under a single agreement.
Regulatory bodies ensure all participants follow financial standards and protocols, protecting customer rights and keeping transactions safe.
How Pay by Bank payments work step-by-step
Pay by Bank combines security with ease of use. Customers approve payments in their banking apps, without sharing sensitive data. Not having to fill out long checkout forms speeds up the process.
This is how it works:
Step 1:Choosing the payment option
The customer selects Pay by Bank at checkout.
Step 2: Authentication
They are redirected to their banking app and confirm their identity using biometrics or a PIN. This follows strong customer authentication (SCA) requirements.
Step 3: Authorisation
After logging in, the user reviews the payment details and confirms the transaction directly from their bank account.
Step 4: Confirmation
The bank approves the payment and instantly notifies both the merchant and the customer that the payment was successful.
Benefits of adding Pay by Bank to checkout
Pay by Bank can significantly enhance your customers’ checkout experience. But they are not the only ones benefiting here. Your business also gets great competitive and operational advantages:
Higher conversion – no blocked cards or declined transactions means fewer drop-offs at checkout and higher payment success rates.
Customer trust –a smooth payment experience with no need to enter payment details makes payers feel secure and cared about, which promotes loyalty and repeat orders.
Near-instant processing – both you and payers get payment confirmations in just seconds, which for you means faster access to funds and optimised business operations.
High-level security –thanks to strong bank authentication, the possibility of fraud is practically eliminated.
No chargebacks – as payments are approved directly from customers’ banking apps, removing the risk of disputes and friendly fraud.
All of these benefits are easy to unlock with Payop’s Pay by Bank – a custom-built solution enabling instant bank transfers across 15 European countries. It integrates through our single API, supports real-time payment confirmation, and allows businesses to accept bank payments around the clock, including weekends and holidays. As a result, you can deliver a faster, more secure checkout experience with less operational complexity.
