Pay by bank lets your customer pay an invoice straight from their bank account by approving a pre-filled payment in their own banking app. The money travels over Faster Payments and usually arrives within minutes, with the amount and reference already correct. It suits one-off invoices, deposits and large bills, but each payment needs your customer's approval, so it doesn't replace direct debit for recurring fees.
In this article
The short version
- Pay by bank is a pre-filled bank payment your customer approves in their app.
- Money usually arrives within minutes over Faster Payments.
- There's no chargeback, so refunds come from you.
- Each payment needs approval, so it doesn't replace direct debit for recurring fees.
- Bank payment fees are often capped, so large invoices cost far less than by card.
What pay by bank is
Pay by bank is the payment side of open banking. A payment initiation provider, a firm authorised by the FCA to start payments on a customer's instruction, connects to your customer's bank and prepares a payment to you. Your customer then approves it inside their own banking app, using the same login and security they use for everything else there.
What comes out the other end is an ordinary bank transfer over Faster Payments, with your account details, the amount and the invoice reference already filled in. That's the practical difference from printing your sort code and account number on an invoice. Nobody has to copy anything across, so the reference doesn't arrive blank or wrong and the payment can't be sent to a mistyped account.
The payment is a push, so your customer's bank sends the money because your customer told it to, and you never pull anything. It's also single use. One approval covers one payment of one amount, and nothing carries over to next month's invoice.
What happens when a customer pays an invoice this way
From your invoice to your bank account, the steps are:
- You send the invoice or a payment link with pay by bank offered on the payment page.
- Your customer chooses pay by bank and picks their bank from a list.
- Their banking app opens with the payment ready: your business, the amount and the reference.
- They approve it with their usual security, such as a fingerprint or passcode.
- The money moves over Faster Payments, usually within minutes and occasionally up to two hours.
Because the reference travels with the payment, it can be matched to the right invoice automatically when it arrives, without anyone searching the bank feed at month end.
Once a Faster Payment is sent, it can't be cancelled. For you, that means there's no chargeback: money that reaches your account stays there unless you choose to refund it. For your customer, it means less protection than a card would give them. They have no chargeback and no section 75 claim, and if they want money back because of a problem with your work, they have to ask you. If they're tricked into paying a fraudster, the separate reimbursement rules for authorised push payment fraud may help, but only for individuals, micro-enterprises and charities. If a customer asks, it's worth telling them plainly that any refund would come from you.
Where it works well and where it doesn't
Pay by bank is at its best when someone is ready to pay you now:
- a deposit before you start work
- a final bill your customer wants cleared
- a large one-off invoice, where a card fee would be high
- an invoice being settled while you're on the phone together
Faster Payments runs day and night, every day of the year, so an invoice approved on a Sunday evening leaves your customer's account on Sunday evening.
It's less suited to a few situations. Recurring fees are the main one: a monthly retainer paid this way means twelve separate approvals a year and twelve chances to forget, so direct debit is still the better fit for anything regular. Variable recurring payments, which let a customer give a standing permission for repeat open banking payments, launched in June 2026 for a limited set of sectors and don't yet cover ordinary invoices.
Bank limits can also get in the way. Each bank sets its own maximum for a single Faster Payment, and a payment above your customer's limit is refused even though the scheme allows far more. For a very large invoice, it's worth mentioning this before your customer tries. And some customers simply prefer cards, for the credit, the points or the protection.
What it costs
Pay by bank is usually priced per payment by your provider, often with a cap, so it tends to cost far less than a card on larger invoices.
On Adfin's published pricing, each successful payment costs 1% + 20p, and for bank payments the percentage is capped at £4. A £500 invoice and a £9,000 invoice both cost £4.20 to collect by pay by bank, where a business card payment of £9,000 at 2% + 20p would cost £180.20. Bank payments are paid out the same day, in full, with the fee invoiced separately, so you receive the full amount your customer paid.
The payment page puts pay by bank alongside card, Apple Pay and Google Pay, so your customer can choose, and you can send the link by email, SMS or WhatsApp. If the invoice still isn't paid, Adfin's Customer Agents can follow up on the schedule you set, with the same link in every reminder.
Common questions
Is pay by bank the same as open banking? Pay by bank is the payment side of open banking. A regulated provider prepares the payment and your customer approves it in their own banking app.
Can an open banking payment be reversed or charged back? No. Once a Faster Payment is sent it can't be cancelled, so there's no chargeback. A customer who wants money back has to ask you for a refund.
How quickly does a pay by bank payment arrive? Usually within minutes, and occasionally up to two hours. On Adfin, bank payments are paid out to you the same day.
Is pay by bank cheaper than card? Often, on larger invoices. Many providers cap the fee for bank payments, while card fees are a percentage with no ceiling.
Can I use pay by bank to collect a monthly retainer? You can send a pay by bank link every month, but your client has to approve each payment. For fees collected without your client acting, direct debit is the method available today.
Do my customers need to sign up for anything? No. They just need a UK bank account with online or app banking, and they approve the payment with their usual security.
Sources
- Open Banking Limited - Pay by bank (accurate as of October 2026) https://www.openbanking.org.uk/pay-by-bank/
- Pay.UK - Faster Payment System (accurate as of October 2026) https://www.wearepay.uk/what-we-do/payment-systems/faster-payment-system/
- Payment Systems Regulator - APP fraud reimbursement protections (accurate as of October 2026) https://www.psr.org.uk/information-for-consumers/app-fraud-reimbursement-protections/
- FCA - Fraudulent payments: getting your money back (accurate as of October 2026) https://www.fca.org.uk/consumers/fraudulent-payments
- Adfin - Pricing (accurate as of October 2026) https://www.adfin.com/pricing
