Also called: Account-to-account payments, Pay by Bank, Payment Initiation Service Provider (PISP), PISP
What open banking is
Open banking lets a customer give an app or website permission to connect to a financial account. The service uses that connection to share selected account data or initiate a payment. Pay by Bank is the checkout use: your customer chooses a bank account instead of entering card details.
The customer selects a bank, authenticates through the bank, and approves the payment. A third party that connects the merchant and bank is sometimes called a Payment Initiation Service Provider, or PISP. That label is common in UK and European payment descriptions; US Pay by Bank payments are facilitated through commercial partnerships among aggregators, banks, and processors.
Pay by Bank changes how money moves, but the provider’s total price and return handling determine whether it works for your business.
How Pay by Bank works in the US
Pay by Bank describes a payment method, not one payment network. A payment can move as a credit transfer, where the customer sends funds, or as a direct debit, where your business initiates an authorized withdrawal. US payments can use ACH, FedNow, or RTP, with each rail following its own rules. FedNow and RTP support credits, not debits.
That distinction affects timing. A credit can post in seconds or by the next business day. A debit can settle within hours or by the next business day. Your checkout confirmation and bank notification are separate events, so make sure your order workflow uses a clear payment-status signal before treating an order as paid.
What it means for your costs
There is no standard US Pay by Bank fee schedule in the available research. Provider pricing, including a fixed per-transaction price, is a matter of the specific service. Compare the full charge for each payment with your card costs before promising savings. Include transaction fees, monthly charges, refunds, and the cost of handling failed or returned payments.
Pay by Bank avoids card credentials and card-network processing for that payment, but that fact alone does not establish a lower total cost. It can fit businesses that already take checks or ACH, or that have larger transactions and recurring bills. Test it with the payment types your customers actually use, and track completion and return rates alongside fees.
Returns, timing, and reconciliation
When a Pay by Bank debit uses ACH, a consumer can return an unauthorized debit up to 60 calendar days after settlement, as of 2026. That is a different process from a card chargeback. Build a process for handling returns and do not treat an initial authorization as proof that funds are irrevocably settled.
Payment references can help match a bank payment to an invoice or order, but there is no single standard Pay by Bank statement label. Confirm what transaction details your provider sends to your accounting system, then reconcile those records against your bank activity. This matters for recurring billing, supplier payments, and customer refunds.
What you can actually change
- Compare total costs. Get the per-payment price and every recurring or exception fee. Compare them with your card costs for the same sale types.
- Check payment status. Confirm how your checkout identifies an initiated, completed, and returned payment. Set order release rules around the status your system actually receives.
- Test reconciliation. Run a small group of payments and match each reference to your invoices and bank activity. Confirm how refunds and ACH returns appear in your records.
Frequently asked questions
Is Pay by Bank cheaper than accepting cards?
There is no standard US Pay by Bank fee schedule, and the available research gives no universal fee amount. Compare your provider’s full per-payment and monthly charges with your card costs, including the work and fees involved in returns and refunds.
Does Pay by Bank settle instantly?
Not in every case. In the US, a credit transfer can post in seconds or by the next business day, while a debit can settle within hours or by the next business day. The payment rail and bank determine the timing.
Can a customer return a Pay by Bank payment?
Yes. For an ACH consumer debit, an unauthorized-payment return can come back up to 60 calendar days after settlement, as of 2026. That return process differs from a card chargeback, so your staff should have a separate response process.
Does Pay by Bank use card numbers?
No. Pay by Bank uses bank-account information and authorization rather than card credentials such as a card number, security code, or expiration date. The customer authenticates through the bank as part of approving the payment.