To offer Pay by Bank, partner with an open banking provider and integrate their API into your payment flow. This enables your customers or merchants to initiate secure account-to-account payments directly from their bank accounts. Pay by Bank offers faster settlement, lower fees, and a frictionless user experience compared to card payments.

Here’s how to offer Pay by Bank successfully, from choosing a provider to building the right customer flow.

1. Choose an open banking payments provider

To get started, you need to work with a regulated Payment Initiation Service Provider (PISP). This is the type of open banking provider authorised to initiate direct payments on a user’s behalf.

When selecting a provider, consider the following:

• Payment types supported Basic support includes single immediate or scheduled payments. More advanced providers also offer:
  • Bulk payments
  • Sweeping variable recurring payments (for personal accounts)

Choosing a provider that supports these can help you avoid switching platforms later.

Also consider:

• Market coverage: Evaluate coverage by country and by bank. For example, some platforms are strong in the UK, others focus on Europe or North America. Ensure your provider can connect to the banks in the regions where your merchants operate.

• Hosted vs white-label flows: Hosted flows are faster to implement and easier for small teams. White-label options give you more control over branding and UX. A provider that offers both lets you start quickly while building your own solution in parallel.

• Data service support: Some PISPs are also authorised as AISPs, which allows them to access bank data. If you want to offer features like KYC, account aggregation, or affordability checks, choose a provider that offers both payment and data services.

• Developer experience and compliance: Look for well-documented APIs, a testing sandbox, and certifications like ISO 27001. Your provider should be PSD2 and GDPR compliant and use secure authentication methods like Strong Customer Authentication (SCA).

For instance, Yapily is an open banking platform used by many PSPs and fintechs to offer Pay by Bank services across Europe. It supports a wide range of payment types, offers both hosted and white-label options, and connects to nearly 2,000 banks in 19 countries.

2. Choose your integration method

Most providers offer two ways to integrate:

Direct API integration

Ideal for teams that want full control over the payment experience. You design and manage the front end, while the provider handles the regulated back-end infrastructure.

Hosted solution

Faster to implement and easier to maintain. Hosted flows are maintained by the provider and updated as open banking regulations or user expectations evolve.

For example, Yapily’s Hosted Pages allow you to go live with Pay by Bank quickly, without needing to build a front end from scratch. You can later move to a white-label solution as you scale.

3. Build your customer flow

A smooth payment flow is essential for conversion. The typical Pay by Bank journey looks like this:

1. Customer selects “Pay from your bank” at checkout
2. They choose their bank from a list
3. They are redirected to their banking app or portal
4. They authorise the payment via biometric login or secure credentials
5. They are redirected back to your site with real-time confirmation \

Best practices for implementing Pay by Bank

• Pre-fill known payment details (e.g., amount, reference)
• Avoid unnecessary redirects or extra steps
• Use clear CTAs and explain that users are paying securely through their bank
• Provide confirmation immediately after payment

A hosted flow will cover many of these UX principles out of the box, but you can also apply them to custom integrations.

How to handle settlement and reconciliation with Pay by Bank

One of the key advantages of Pay by Bank is faster settlement. Payments often clear instantly or same-day, compared to two to three days for cards.

To manage reconciliation efficiently:

• Include metadata such as order IDs or invoice references in the payment request
• Use webhooks or polling to track payment status in real time
• Integrate with accounting or ERP systems to automate downstream processes

Some providers like Yapily support enriched payment data or webhook-based reconciliation flows.

How to communicate the benefits of Pay by Bank to merchants

Even though Pay by Bank is faster and cheaper, users may be unfamiliar with it. It helps to position it clearly in the checkout flow.

Comparison: Pay by Bank vs card payments

**Choose Yapily to offer Pay by Bank **

As a summary, here’s how to offer Pay by Bank payments:

1. Choose a regulated open banking provider
2. Decide between a direct API or a hosted integration
3. Build a smooth payment flow that minimises user friction
4. Ensure fast settlement and clean reconciliation
5. Clearly explain the benefits to encourage adoption

Open banking is gaining traction across Europe, and Pay by Bank is becoming a preferred payment method in key markets. By offering it now, you can reduce costs, improve payment speed, and create a more seamless experience for your users or merchants.

A provider like Yapily offers the infrastructure, coverage, and flexibility needed to support your growth, whether you’re looking to launch quickly or build a fully custom solution.

Ready to get started? Speak with an open banking expert today.

FAQ: How to offer Pay by Bank

1. What do I need to offer Pay by Bank? You need to integrate with a licensed Payment Initiation Service Provider (PISP) that gives you secure access to initiate account-to-account payments through a single API.

2. How long does it take to set up Pay by Bank? With a hosted solution, you can go live in days. A direct integration may take longer depending on your team’s resources and design requirements.

3. Can I offer recurring payments with Pay by Bank? Yes, in the UK you can offer variable recurring payments (VRPs) such as sweeping and commercial VRPs. Availability varies by provider and region.

4. Do I need to be regulated to offer this? No. The open banking provider handles the regulation. You are simply integrating their services into your platform or checkout flow.

5. How does Pay by Bank improve conversion rates? It removes friction at checkout, avoids card declines, and gives users real-time confirmation. Studies show high cart abandonment when payments are too slow or complex.