Pay by Bank: How It Works, Fees and Invoicing in 2026

Pay by bank lets a customer pay you directly from their bank account through a secure, pre-filled payment request that they approve in their own banking app. There are no card numbers involved, settlement is often instant, and fees are usually lower than card processing. It is built on open banking in the UK and EU and on ACH and instant rails in the US.

If you send invoices to clients who already settle by bank transfer, pay by bank is the natural upgrade: the same money movement, but without the typos, missing references and "which account do I pay?" emails. This guide explains how it works in each region, what it costs compared with cards, and how to add it to your invoices without changing how you bill.

What is pay by bank?

Pay by bank is an umbrella term for account-to-account payments that a third party starts on the payer's behalf. You will also see it called open banking payments, A2A payments, bank pay or instant bank pay. The idea is the same everywhere:

1. The customer clicks a payment link, scans a QR code or chooses to pay from their bank at checkout.
2. They pick their bank from a list.
3. They are redirected to their banking app or website and log in with their usual security (often a fingerprint or face scan).
4. The app shows a payment already filled in with your name, account, the exact amount and the invoice reference.
5. They approve it, and the money moves from their account to yours over a bank rail.

The provider in the middle never holds the customer's banking password. In the UK and EU it is a regulated payment initiation service provider (PISP). In the US it is usually a payment company that verifies the account and then debits it.

What makes this different from a plain bank transfer is that nobody types your details by hand. That one change removes most of the friction in invoice payments: wrong account numbers, missing invoice references and partial amounts.

How open banking payments work in the UK

The UK has the most mature open banking market. Since 2018, the largest banks have been required to offer standard APIs that let regulated providers initiate payments, and those payments usually travel over Faster Payments, so they arrive in seconds in most cases.

Usage keeps growing. Open Banking Limited reported that monthly open banking payments passed 40 million for the first time in May 2026 and that cumulative payments passed one billion in June 2026. Those figures cover the largest banks, so they understate total account-to-account volume.

Two UK features matter for invoicing:

• Single immediate payments. This is the classic one-off payment: perfect for paying a single invoice from a link.
• Variable recurring payments (VRPs). Sweeping VRPs between a person's own accounts have run since 2022. Commercial VRPs, which let a customer authorise a business to collect variable amounts within limits, began a phased launch in June 2026 under the new UK Payments Initiative scheme. Bank coverage was still expanding at the time of writing, so check what your provider supports.

UK payers also benefit from Confirmation of Payee, which checks that the account name matches the account details. That is one more reason your invoice should show the exact legal name on your business bank account. Our guide to UK Direct Debit for small businesses compares the older pull-payment option if you bill the same clients every month.

Account-to-account payments in the EU

In the EU, PSD2 gave regulated providers the right to initiate payments from customer accounts, and the Instant Payments Regulation has since made SEPA Instant Credit Transfers widely available. Under that regulation, payment providers in the euro area had to be able to send instant euro payments by 9 October 2025, price them no higher than standard credit transfers, and offer Verification of Payee, which checks the payee name against the IBAN.

On top of that infrastructure sit national and pan-European brands. The Netherlands has used iDEAL for years, and iDEAL is moving to Wero, the wallet from the European Payments Initiative. Our explainer on Wero payments in Europe covers that rollout in detail. For regular billing, SEPA Direct Debit remains the main pull option.

Pay by bank in the US

The US does not have a mandated open banking payment scheme like the UK. US products usually work in one of two ways:

• ACH debit with instant account verification. The customer links their account through a data provider, and the payment company pulls the money as an ACH debit. Funds typically settle in one to a few business days.
• Instant credit transfers. Some products use RTP or FedNow to push money instantly. Coverage depends on whether the customer's bank participates. The two US instant networks, FedNow and RTP, are run by different operators, and not every bank has joined both.

US rules on consumer data access (often called the Section 1033 open banking rule) have been through legal challenges and revisions, so the market is still settling. If you invoice US clients, the practical options today are an ACH debit product from your payment provider or plain ACH and wire details on the invoice. Our guide to ACH vs wire transfer explains the trade-offs. ACH also has new fraud monitoring duties this year; see the Nacha 2026 rules.

Pay by bank fees vs card fees

The main reason businesses switch is cost. Card payments carry interchange and scheme fees that usually scale with the amount. Bank payments usually do not, or the percentage is lower and capped.

Payment method	Typical pricing model	Settlement	Reversal risk
Credit or debit card	Percentage plus fixed fee	1 to 3 business days	Chargebacks possible for months
Open banking payment (UK and EU)	Flat fee or low percentage, varies by provider	Often instant	Low; authorised payments are hard to reverse
US ACH debit	Low percentage, often capped	1 to 4 business days	Returns possible, especially for consumer accounts
Manual bank transfer	Usually free to receive locally	Same day to a few days	Low

Worked example: a $4,000 invoice

Using Stripe's published US list prices at the time of writing (2.9% plus 30 cents for domestic cards, and 0.8% capped at $5 for ACH Direct Debit):

• Card: 4,000 x 2.9% = $116, plus $0.30 = $116.30 in fees.
• ACH Direct Debit: 4,000 x 0.8% = $32, capped at $5.00.

That is a saving of $111.30 on one invoice. If you send ten invoices of that size a month, the difference is over $13,000 a year. On a $60 invoice, the gap is much smaller ($2.04 by card versus $0.48 by ACH), which is why bank payments matter most for larger B2B invoices.

Prices change and differ by provider, country and account type, so always confirm on your provider's current pricing page. Also watch for extra charges, such as fees for failed payments, instant account verification or faster settlement.

One caution on passing costs on: if you want to add a surcharge for cards to nudge clients towards bank payments, the rules vary by country and US state. Check the surcharge rules that apply to you, and to your client, first.

Pros and cons of pay by bank for invoices

Advantages

• Lower fees, especially on large invoices.
• Faster cash: instant settlement in the UK and much of the EU.
• Fewer reconciliation problems, because the invoice number travels as the payment reference.
• No card data to store or protect.
• Fewer chargebacks, since authorised bank payments are not disputed the same way cards are.

Drawbacks

• Bank coverage gaps: some smaller banks or business accounts are not supported by every provider.
• Corporate approval workflows: many larger clients pay through an accounts payable run and cannot click a link at all.
• Refunds are manual outbound payments.
• Customer protection is weaker than cards, which some consumers notice.

How to add pay by bank to your invoices

You do not need special invoicing software. A clear invoice plus a payment link from your provider works well:

1. Choose a provider that supports bank payments in your clients' countries. Check fees, settlement speed and which banks are covered.
2. Create your invoice with a unique number from a consistent invoice numbering system. That number becomes the payment reference.
3. Generate a payment link or QR code in your provider's dashboard for the exact invoice total and paste it into the notes or payment instructions. Our guide on adding a payment link to an invoice shows the wording that works.
4. Keep your bank details on the invoice as a fallback: account name, account number and sort code, or IBAN and BIC, or routing number. See how to show bank details on an invoice.
5. State the reference clearly: "Please use INV-2026-041 as the payment reference."
6. Mark the invoice paid in your own records when the money lands, and send a receipt if the client needs one.

Our free invoice generator lets you put the payment link and bank details in the notes and terms, set the currency, and download a clean PDF. It does not process payments or generate links itself, so the link always comes from your payment provider.

Example payment instructions

Here is wording you can adapt for the notes section:

"Pay instantly by bank: [your provider's link]. Or transfer to Acme Design Ltd, sort code 00-00-00, account 12345678. Reference: INV-2026-041. Payment due within 14 days."

Explaining bank payments to clients

The first time a client sees a bank payment link on your invoice, they may hesitate. A short explanation removes most of the doubt. Tell them three things:

• They stay in control. The payment only happens when they approve it in their own banking app. You never see their login details.
• The details are pre-filled. Your account name, the amount and the invoice number appear automatically, so there is nothing to type and nothing to get wrong.
• They can still pay the old way. Your full bank details remain on the invoice for anyone who prefers a manual transfer or pays through an accounts payable run.

Expect some clients to keep paying manually, especially larger companies. That is fine. The goal is to make the fastest route the easiest one, not to force a change.

Handling partial payments and overpayments

Because the amount is fixed in the link, partial payments are rarer than with manual transfers. If a client does pay part of the balance, record the amount paid and send an updated invoice showing the balance due; our guide to partial payment invoices shows the layout. If someone pays twice, refund the duplicate promptly as a new outbound transfer and keep a note of both transactions for your records.

Is pay by bank right for your business?

It fits best when most of these are true:

• Your invoices are mid to large value, so card fees hurt.
• Your clients are small businesses or individuals who can approve payments themselves.
• You invoice mainly in one country or currency zone (UK, euro area or US).
• You already receive a lot of bank transfers and spend time matching them.

If your clients are large companies with formal accounts payable teams, a link may not help much, because they pay through scheduled batches. In that case, focus on clean bank details, a correct reference and terms that match their payment cycle. Our guide on how to get paid faster covers the other levers.

Conclusion

Pay by bank is the cheapest and often fastest way to collect invoice payments from clients who can approve a transfer themselves. Start with one provider, add the link and your bank details to every invoice, and use the invoice number as the reference so reconciliation takes minutes, not hours. When you are ready, build your next invoice with our free invoice generator and put your pay by bank link in the payment notes.