What is Pay by Bank in the UK?
Pay by Bank is an open banking payment: the shopper approves the payment in their banking app and the money moves instantly by Faster Payments, without a card. Open banking payments reached 40.16 million in June 2026, and commercial variable recurring payments launched the same month.
In detail
Pay by Bank is an open banking payment. At checkout, the shopper selects their bank, approves the payment in their banking app, and the money moves instantly over Faster Payments, without a card.
How big it is
Open banking payments reached 40.16 million in June 2026, including 7.73 million sweeping variable recurring payments (VRPs). The FCA says more than 16 million people use open banking. Faster Payments, the underlying rail, processed 5.5 billion transactions in 2025.
Commercial VRPs
Commercial variable recurring payments went live in June 2026 under the UK Payments Initiative scheme. They let a shopper authorize a merchant to collect variable amounts from their account within agreed limits, which suits subscriptions and recurring bills.
Why merchants look at it
- Funds arrive instantly, without card scheme fees.
- No card details to store or secure.
- Bank authentication in the app reduces some fraud risks.
Bacs Direct Debit remains the default for regular bills, with 5 billion payments in 2025.
What it means for payment operators
For operators serving UK merchants, Pay by Bank is a growing option next to cards and wallets, and commercial VRPs open a new route for recurring payments. Connecting an open banking provider and enabling it per merchant lets you offer both.