Recent media coverage of Pay by Bank has started to reach a much wider audience and included a feature on BBC Breakfast on Monday morning.
That reflects real growth. Millions of transactions are now taking place each month in the UK, and large merchants are beginning to adopt at scale.¹
But concerns about consumer protection still dominate, with credit and debit cards treated as the reference point. Pay by Bank is contrasted with chargebacks and Section 75 protections offered by cards, and the conclusion is often that something is missing. It's a valid concern.
What is actually being compared
Card payments operate through scheme-based networks. Consumer protection sits within those schemes, allowing transactions to be challenged and, in some cases, reversed after the event.
Pay by Bank follows a different model.
The customer authorises the payment directly from their bank account. The transaction is explicit and immediate. That changes both how the payment works and where protection needs to sit.
As things currently stand, expecting the two models to behave in exactly the same way can lead to confusion.
Where protection sits today
Consumers using Pay by Bank are not without protection.
They retain rights under the Consumer Rights Act where goods are faulty or not as described. They also benefit from bank-level authentication, which reduces the likelihood of unauthorised payments.
What is different today is that scheme-based chargeback processes are not available in the same way.
For smaller purchases, that difference may not change behaviour. For higher-value transactions, it often does. That is where attention tends to focus.
The direction is towards stronger and more consistent protection models that align with how these payments are authorised.
What needs to happen next
As Pay by Bank moves further into everyday use, expectations will shift.
Consumers will expect a consistent level of confidence across payment methods. The mechanisms may differ, but a comparable sense of protection when something goes wrong is important. That requires:
- clear and accessible dispute processes;
- well-defined liability across participants;
- consistent handling across banks and providers.
This is already becoming an area of increased industry focus, covering commercial models, dispute handling and liability frameworks as part of the next phase of open banking development.²
A different foundation
There is also an important structural difference in how Pay by Bank operates.
Every payment is authorised within the customer’s banking environment. The customer sees exactly what they are approving at the point of payment, without stored credentials or background reuse of payment details. Commercial VRP will facilitate recurring payments, but with more direct control for consumers than exists under the Direct Debit scheme or card-on-file models.
That level of transparency changes the starting point, and although that does not remove the need for protection, it does influence how that protection can be designed and delivered.
Everyday payments
For Pay by Bank to become a true everyday payment method, it needs to meet a simple standard.
Customers should feel comfortable using it for low-value transactions without hesitation. They should feel equally confident using it when the value of those transactions increases.
That confidence will come from how clearly protection is defined, how consistently it is applied, and how well it is understood by customers. The next phase of adoption depends on getting this right.
¹ Pay by Bank usage continues to grow in the UK, with tens of millions of transactions taking place monthly across merchants and public sector organisations. Link
² Industry and regulatory workstreams under JROC and Open Banking Limited are progressing commercial models, dispute handling and liability frameworks for open banking payments. Link
