Pay by Bank: can you trust this new way to pay?

You may have recently spotted yet another new way to pay online – it’s usually called Pay by Bank and is being hyped as the easy, fast and secure way to book your next flight, order a pizza or even place a bet. But can you trust it? 

These types of payments are underpinned by open banking application programming interfaces (APIs), which let your bank and trusted third parties ‘talk’ to each other securely. It’s the same way that, say, Uber connects with Google Maps so that you can track your driver in real time. 

Now the same technology is popping up at online checkouts, letting you pay directly from your bank account when shopping with big names such as Booking.com, JustEat and Ryanair. 

Some predict Pay by Bank will eventually become as big, if not bigger, than card payments. But our probe into the protections – or lack of them – highlights why you shouldn’t be ditching your debit or credit card just yet. 

How Pay by Bank works

Pay by Bank is a way to transfer money to a firm from your current account, instead of using a card. Unlike a manual bank transfer, you don’t need to add any payee details, which reduces the chance of sending the money to the wrong account. 

You click on Pay by Bank at the checkout (there isn’t a ubiquitous term yet, so it may be called ‘pay with my bank account’, ‘online bank payment’ or ‘UK online bank transfer’ instead), then select your bank. 

At the time of writing, only Metro Bank and The Co-operative Bank were unavailable when we tried to use Pay by Bank at various retailers. 

Once you’ve selected your current account provider, you’re taken to its website or app where you log in as normal. You then approve or decline the payment, before being redirected back to the retailer, where the purchase is confirmed. 

• Find out more: best bank accounts 2025.

First in Which? Money magazine

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Where can you use Pay By Bank?

HMRC has been offering Pay by Bank as a way to make tax payments online since 2021. It’s now taken more than 10m payments worth almost £33bn through open banking, according to a government report in November 2024. 

Progress has been much slower in retail. Airlines are leading the way, including Norwegian, Ryanair and Wizz Air, as well as long-haul providers such as Emirates and Etihad Airways. 

Outside of airlines, it’s less widespread – for now. Examples we found included Booking.com, Holland & Barrett, Lastminute.com, Papa Johns, Topps Tiles and Urban Outfitters. 

Is Pay by Bank safe?

Retailers can only offer Pay by Bank through commercial contracts with regulated third-party open banking payment providers (the biggest are Truelayer and Trustly), which carry out due diligence. 

These early partnerships are all with established retailers, which massively reduces the risk of fraud. If a fraudster does find a way to use Pay by Bank to make unauthorised payments from your account, you can get redress under the Payment Services Regulations. You can also claim reimbursement of up to £85,000 if you’re tricked into authorising a payment to a scammer, known as authorised push payment (APP) fraud. 

Perhaps the most attractive feature of Pay by Bank is that you don’t have to share any card details, which can be stolen or leaked. But that also means you lose card protections such as Section 75 and chargeback. 

So, where does this leave you if you have a dispute with a retailer?

The Consumer Rights Act is a vital safety net, no matter how you pay. This means that the physical or digital goods and services you buy must be fit for purpose, as described and of satisfactory quality. If goods arrive damaged or don’t last as long as you might reasonably expect, you can ask the retailer that sold you the product (not the manufacturer) for a refund or repair. Pay by Bank refunds should be instant, too, whereas card refunds can take days or even weeks. 

This relies on retailers still being in business, of course. So, while you arguably don’t need Section 75 and chargeback protection for every purchase, Pay by Bank carries clear risk for future-dated purchases such as flights or event tickets. 

You’ll also forego any perks linked to your card spending, such as air miles and cashback.

• Find out more: credit and debit card protections explained.

Mind the payment protection gap

In a nationally representative survey we ran earlier this year, just 13% of people knew that they would have no clear purchase protections if they used Pay by Bank to book flights and the airline subsequently stopped trading.

Meanwhile, 33% of adults mistakenly assumed they could rely on Section 75 if they bought goods worth £40 using a credit card and had an unresolved dispute with the retailer. But, Section 75 only applies to credit purchases where a single item costs more than £100 and less than £30,000. 

Just 19% knew that they could try chargeback if something went wrong with a debit card purchase (this applies to debit and credit purchases of any value).

The people we surveyed told us ‘it’s a minefield’ or ‘too confusing’ to understand payment protections, making some feel wary about paying the ‘wrong’ way or too nervous to order things online. 

• Find out more: Section 75 explained.

The strengths of Pay by Bank

Where Pay by Bank shines is if you want to securely transfer money between your own financial accounts with different providers (known as sweeping or ‘me-to-me’ payments). For example, it’s a seamless, speedy way to pay your monthly credit card bill (Amex told us that it’s become the top payment method chosen by its customers). 

Or, you could use it to move surplus money to boost your savings or reduce overdraft fees. 

Simon Lyons from OBConnect, a software provider for banks and fintechs, told us that he expects to see more collaborations within existing services, such as Transport for London using Pay By Bank at barriers. 

He’s less enthusiastic about the future of open banking for retail purchases such as a supermarket shop: ‘Look at who you’re dealing with, not what you use. We don’t check the bank account of a seller, we buy from a trusted party. Open banking should be treated the same way. Am I buying goods with a risk of not being delivered? If the answer’s yes, use a card instead.’

• Find out more: our step-by-step guide to using open banking safely.

The future of open banking

While we don’t think Pay by Bank is the best option for online shopping today, because it lacks the rigorous purchase protections you get when paying by card, this is expected to change. 

Open Banking Ltd, which developed the standards and industry guidelines for open banking, told us: ‘We’re working closely with the government, regulators and industry to finalise and implement the long-term framework as quickly as possible. A key part of this will be implementing appropriate purchase protections.’ 

Until protections catch up, Which? is urging consumers to think carefully before using Pay by Bank to book events or make major purchases. 

In March 2025, we conducted a nationally representative survey with 2,514 adult members of the UK public, conducted by Deltapoll.