Pay-by-Bank continues to grow in popularity and has emerged as one of the top three payment methods in several European countries.
According to Brite Payments’ Instant Economy Payment Insights report, nearly three-quarters (73%) of consumers surveyed said they were familiar with pay-by-bank. That figure stood at a whopping 97% in the Netherlands and 90% in the UK.
Pay-by-bank allows consumers to make purchases directly from their bank account without having to input account and routing numbers for each transaction. Because there are no swipe fees involved, merchants are favorably disposed toward pay-by-bank. The nations where it’s already a top three payment method include the UK, Netherlands, Finland, Spain, and Germany.
Usage of pay-by-bank tends to be more prevalent among younger demographics. More than one-third (36%) of respondents ages 18 to 29 reported using pay-by-bank either daily or weekly compared to just 25% across all age groups. Additionally, pay-by-bank is three times more likely to be used on a daily or weekly basis compared to buy now, pay later (25% vs. 7%).
Positives and (a Few) Negatives
Consumer concerns around adopting a new payment method centered around several key factors. According to Brite, security—cited by 73% of the respondents—was the most important factor, followed closely by fees (64%) and ease of use (47%).
Speed was less of a factor—though still significant—with 42% of pay-by-bank users saying they use it because of how quickly the transaction is processed. About a third placed high importance on seeing transactions reflected immediately in their accounts, but more than half agreed that waiting for more than an hour to receive a payment from a business was unreasonable.
The roadblocks to adoption of this method seem relatively minor. The most frequently cited issues with online payment were the need to create an account to complete a payment and the requirement to use an app for payment. But even those concerns were mentioned by less than a quarter of respondents.
“Whether they’re called A2A payments, direct debit, or pay-by-bank – when a customer pays a merchant directly from their bank account is not new,” said Elisa Tavilla, Director of Debit Payments at Javelin Strategy & Research. “However, newer technology and real-time payments have enhanced the user experience in newer pay-by-bank solutions that leverage open banking and APIs. Customers no longer have to manually entire their bank routing and account numbers.
“Pay-by-bank adoption is stronger in some European markets, where the solutions offer a more convenient, efficient, secure, and seamless checkout experience,” she added. “In the U.S., consumers prefer credit and debit cards for both online and in-store purchases. Some pay with their bank accounts, but it’s a less common method. As real-time payments and open banking develops in the U.S., newer pay-by-bank solutions may become available that might be more appealing and broadly adopted.”
