Resetting the Narrative - The Real Story Behind Pay by Bank

By Lena Hackelöer, Founder & CEO, Brite Payments

In fintech, speed is often celebrated, whether it’s the speed of innovation or the speed of transactions. But when it comes to consumer understanding of fintech, perceptions often lag far behind. 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.

Despite being one of the most secure and efficient ways to pay, Pay by Bank remains widely misunderstood, and it is something we in the industry can work harder to address as clarifying some common misunderstandings may help unlock growth. The same can be said about open banking – the framework that underpins several modern Pay by Bank solutions.

Pay by Bank isn’t a fringe innovation, it’s an increasingly mainstream solution built on strong infrastructure and designed for the mobile-first digital age. So, let’s take a moment to address some of the most persistent myths surrounding this payment method, also known as account-to-account (A2A) payments and look at the facts.

Myth #1: Pay by Bank Lacks Consumer Protections

A common misconception, particularly in the UK, is that Pay by Bank doesn’t offer any consumer protection. While it is true that it does not offer the same refund rights as credit or debit cards, such as Section 75 protections or traditional chargebacks, the framing is misleading. These mechanisms were developed for older payment models and don’t reflect how modern bank-based payments work, nor do they define the entirety of consumer protection.

Pay by Bank operates under PSD2, the EU’s Payment Services Directive. That means it’s subject to some of the strictest security and consumer protection requirements in the financial services industry. All transactions require Strong Customer Authentication (SCA) and are initiated via secure, regulated interfaces. Whether that’s biometric confirmation, app-based authorisation or tokenised approval flows, these measures ensure that users are in full control of every payment and reduce exposure to fraud. This helps minimise disputes that come from unauthorised transactions or false declines.

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 reduces exposure to fraud and helps minimise disputes that come from unauthorised transactions or false declines.

As for refunds? Merchants using Pay by Bank typically operate with clearly defined refund policies. Because there is no need to go through a traditional chargeback process, which can be slow and involve multiple intermediaries, refunds can often be faster and more transparent. At Brite, for example, we only onboard merchants who meet rigorous compliance, KYC and AML standards, which drastically reduces the likelihood of fraud or dispute scenarios arising in the first place.

Myth #2: It’s Risky for Large Transactions

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 offer today.

Despite this, there is an ongoing perception that Pay by Bank is only suitable for small, everyday purchases, and that couldn’t be further from the truth. In fact, the characteristics that make Pay by Bank efficient and secure make it particularly well-suited to high-value transactions.

Currently, consumers using traditional payment methods may face declines due to credit limits, expired cards, or fraud prevention flags. A delay between authorisation and settlement also introduces ambiguity and increased fraud risks into the process.

With Pay by Bank, there is typically no grey area. Transactions are either approved instantly by the user’s bank or they’re not initiated at all. That certainty is important when it comes to large purchases, ranging from travel bookings to deposits for goods and services.

Some consumers may feel more secure using a credit card for large purchases, but Pay by Bank benefits from modern safeguards which again reduce the likelihood of disputes arising in the first place for any large transactions taking place.

From a security standpoint, Pay by Bank – offers direct from source authentication. Combined with SCA, regulatory oversight and trusted merchants, this means less risk exposure, no intermediary storage of payment details and a stronger overall framework for high-value transfers.

Myth #3: Pay by Bank Isn’t Secure

It’s a natural human tendency to equate familiarity with security, as when something feels known, it often feels safer. Card payments have earned consumer trust over the past few decades, as they are familiar and perceived as safe by users. We can recognise that cards have played a pivotal role in enabling the digital economy and empowering consumers to retain control over their payments.

Pay by Bank, by contrast, is newer and less familiar, which may explain why many misconceptions subsist. But when it comes to the underlying infrastructure, it’s arguably more secure by design.

Pay by Bank doesn’t involve entering card numbers online. It doesn’t expose credentials that bad actors can reuse. Credit cards, after all, can be lost, stolen or skimmed. Instead, Pay by Bank uses encrypted, bank-authorised authentication flows, helping to reduce the attack surface significantly. Transactions are initiated directly through the user’s banking app, rather than via a checkout form, which significantly reduces the opportunities for phishing attacks that mimic legitimate sites.

Nonetheless, for certain use cases, card payments remain a convenient option. However, where security, privacy, and control are priorities, particularly in high-trust or high-value contexts, Pay by Bank offers a compelling alternative. This isn’t about replacing one method with another, it’s about recognising the complementary strengths of each.

At its core, Pay by Bank is designed to minimise the most common fraud types by eliminating the need for reusable credentials altogether, rethinking what secure payments can look like in a digital-first world.

Myth #4: Pay by Bank Has Poor Conversion Rates

The idea that Pay by Bank underperforms on conversion is largely a legacy perception and one that stems from the early days of open banking. Back then, fragmented journeys with multiple redirects and clunky interfaces understandably led to user drop-off. However, as the technology has moved on, the user experience has become more seamless and intuitive, making Pay by Bank a fast and easy payment option that encourages completion. This is already evident in some of Europe’s most mature markets for Pay by Bank payments, such as the Nordics or Baltics.

Today, Pay by Bank offers a fully embedded, mobile-first experience that mirrors the simplicity of digital wallets. Payments are completed directly within the user’s banking app through secure authentication methods. The result is a fast frictionless process with no form field, card entries or redirects. Returning customers can complete payments in mere seconds, rivalling even the most established payment methods

In conversion-sensitive sectors like eCommerce and travel, this streamlined approach is proving highly effective. Merchants benefit from fewer declines, no expiry issues and instant payment confirmation, which means reduced cart abandonment, quicker settlement, which ultimately builds reputation and consumer trust.

In the right context, Pay by Bank now matches and often outperforms traditional methods on metrics like speed, satisfaction and completion rates. In our Instant Economy Payments Insights report, we found that out of the six European countries surveyed, 42% of regular Pay by Bank users opt for the payment method because of its speed, and 46% cite its high level of 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.

Payment methods like cards still serve many users well, especially in markets where familiarity drives comfort. However, Pay by Bank has reached a point where it’s a viable alternative and often the smoother path to payment.

Restoring Confidence with Clarity

Ultimately, payments should be invisible, working securely and quickly without the consumer needing to worry about the mechanics behind them. Pay by Bank has introduced a new way for people to pay, supporting people’s shift towards being more mobile-first, security-conscious and impatient with friction.

But myths persist. As an industry, we have a responsibility to help clear them up and ensure we continue to empower people to feel in control and safe with their money. It’s not enough to just build a better solution; we need to communicate its benefits clearly and consistently.

This means correcting the misunderstanding about consumers' protections, usability and performance. It means educating consumers, supporting merchants and holding ourselves to high standards.

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.