Cards, Pay-by-Bank and Multi-Rail Banks

Consumers are paying with a mix of traditional card networks, bank-initiated pay-by-bank services and account-to-account rails that route transactions across multiple payment systems. Banks, fintechs and payment processors have added these options as instant settlement and open-banking APIs become more common and merchants look for lower-cost alternatives to card schemes.

Pay-by-bank lets customers authorize a transfer directly from their bank account through an online banking session or an API-based consent flow. Firms that provide pay-by-bank routing connect acquirers and merchants to bank networks or open-banking interfaces so a payment can be initiated from the payer’s account without a card number.

Regional infrastructure and rules shape which rails dominate. In Europe and the UK, rules such as PSD2 and the spread of SEPA Instant have supported instant bank transfers and open-banking connections, enabling more merchants to accept account-to-account payments at checkout. In the United States, real-time rails such as RTP and networked services like Zelle operate alongside ACH, and some merchants are beginning to offer direct-bank options. India’s Unified Payments Interface (UPI) remains an example of widespread consumer adoption of instant account-to-account payments.

Banks are adding multiple settlement paths. Many now support card processing, account-to-account instant transfers, batch-transfer systems similar to ACH and tokenized debit so they can route a transaction on the basis of cost, speed and fraud controls. That routing is available to merchants and customers at the point of sale while banks retain the customer relationship.

Merchants report pay-by-bank can reduce payment costs. Card networks charge interchange and scheme fees that are part of merchant pricing; direct bank transfers can bypass some of those fees and provide immediate confirmation of funds in markets with instant settlement. Retailers adopting account-to-account payments often cite lower processing fees and fewer chargebacks for push-payment transactions.

Security and fraud controls are central to pay-by-bank deployments. Account-to-account transactions can use stronger authentication through a customer’s banking login and reduce fraud linked to exposed card data. Open-banking consent flows give banks more control over authorization. Industry groups and infrastructure providers are developing standards for transaction confirmation and merchant identity so customers see clear information when they leave a banking app or web session.

Implementation requires technical integration and commercial agreements. Merchants must connect to payment service providers that support the necessary bank links or instant-rail access. Banks and fintechs handle settlement, reconciliation and dispute processes across different systems. In some regions, standard interfaces and messaging are being developed to make merchant integration easier.

Cards remain widely used, especially for cross-border payments and card-linked rewards. Since the 2010s, banks and fintechs have built account-to-account alternatives, and the combination of push payments, real-time settlement and API-based authorization has led to growing use of bank-led and multi-rail options alongside traditional card rails.