Pay by bank is a modern payment method that lets consumers pay directly from their bank account. As card fees and payment friction continue to rise and expectations for speed and simplicity grow, pay by bank is increasingly being adopted alongside staples like credit cards.

The short version

• Pay by bank moves money directly between bank accounts, skipping the middlemen that slow payments down, drive up costs, and increase the chance of failure.
• In the U.S., pay by bank is moving beyond early discovery and becoming a more familiar, repeat payment method for consumers.
• Benefits businesses gain by using pay by bank include:
  
  • Significantly lower processing costs 
  • Higher payment success rates
  • Reduced risk and fraud‍

What is pay by bank?

Pay by bank allows consumers to securely connect their bank account to pay bills, shop online, transfer money between platforms, and set up subscriptions. Instead of entering card details or bank information, customers use their online banking app to authenticate their bank and approve the transaction.

You may also see pay by bank referred to by other names, including:

• Open banking payments
• Account-to-account (A2A) payments
• Modern ACH

They're different names, but the same idea: payments that move money directly between bank accounts without relying on card networks.

Behind the scenes, pay by bank relies on secure, API-based connections that let users link their bank accounts and share only the data needed to complete a payment. That real-time information helps verify accounts, confirm available funds, and move money quickly and reliably.

How does it work?

Pay by bank follows a simple flow that’s designed to be fast for customers and reliable for businesses.

Step 1: Connect a bank (one time)

When a customer chooses pay by bank at checkout, they securely connect their checking or savings account by selecting their bank and authenticating through a familiar login flow. This one-time setup confirms the account and enables future payments without re-entering information.

Step 2: Verify the payment

Once the payment is initiated, risk and account checks are performed to confirm the user has sufficient funds and that the transaction is legitimate. With these checks completed before approval, businesses can be more confident the payment will go through.

Step 3: Move money directly

Once approved, funds move from the customer’s bank to the business over established bank payment rails (including ACH, real-time payment networks like RTP and FedNow, and wires). Fewer intermediaries mean fewer delays, fewer failures, and fewer reversals.

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Why use it?

Pay by bank addresses some of the most common payment challenges businesses face today. That translates into a few clear benefits:

• Lowers payment costs: Pay by bank avoids many of the fees built into card payments, helping businesses keep more revenue from every transaction. Compared to cards, pay by bank typically cuts total payment costs by ~50%.
  
  
• Improves conversion: A faster, more intuitive checkout experience can increase completion rates, helping businesses capture more sales and reduce drop-off, especially for high-value or repeat transactions.
  
  
• Minimizes payment risk: By verifying accounts and confirming payments upfront, pay by bank helps reduce failed payments, returns, and disputes that are more common with cards and traditional ACH.
  
  
• Reduces reliance on cards: Pay by bank gives businesses a practical alternative to card payments, helping limit exposure to rising interchange fees, expired cards, and network-driven declines.
  
  
• Enables instant disbursements and withdrawals: Modern bank payment infrastructure allows the same bank connection used for pay-ins to also support withdrawals and disbursements, making it possible to move money faster in both directions and send or receive funds in near real time.

What to look for in a pay by bank provider
Not all pay by bank solutions are created equal. One of the most important capabilities to look for is Guaranteed ACH, which helps eliminate the risk of returned payments by ensuring funds are available and delivered as expected. This added layer of certainty makes bank payments more dependable for businesses, especially when compared to traditional ACH or card payments that can fail after a transaction is approved.

What are the use cases for pay by bank?

Pay by bank may not be universal yet, but it’s already being used across a growing range of use cases by both businesses and consumers. Rather than replacing cards outright, bank payments are being adopted alongside traditional payment methods (and in some cases in place of them) where they offer clear advantages in cost, speed, or reliability.

• Recurring payments: Pay by bank is increasingly adopted for recurring payments like subscriptions, memberships, and ongoing services, where reliability matters. Because payments are tied directly to a bank account rather than a card, businesses can reduce failed renewals caused by expiration dates or network declines.
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• One-time purchases and online commerce: For one-time purchases and online transactions, pay by bank provides a cost-effective alternative to cards, particularly for higher-value payments. Offering a bank payment experience that’s as easy to use as cards can help increase ACH adoption while reducing returned payments and processing costs.
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• Platform funding and withdrawals: Pay by bank is commonly used to fund and withdraw balances on platforms where money needs to move quickly and reliably. This is especially common in industries like online gaming and marketplaces, where users expect funds to be available without the friction or uncertainty of card-based transfers.
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• High-risk and regulated payments: In industries such as cannabis and online gaming, where card acceptance may be limited or inconsistent, pay by bank provides a compliant way to move money. Direct bank payments help reduce exposure to chargebacks and network restrictions while offering a more stable alternative to cards.

At the consumer level, adoption tends to be driven by a desire for control, transparency, and simplicity. Many younger consumers don’t just prefer alternatives to cards—they actively feel uneasy about using credit for everyday spending. Surveys show Gen Z and millennials are increasingly moving away from credit cards in favor of other payment methods, often citing concerns around debt, fees, and overspending.

That unease is reinforced by broader research linking credit card debt to emotional and financial strain, which can influence spending behavior and long-term financial well-being. At the same time, awareness of card economics is becoming more mainstream, with recent research showing a majority of consumers support efforts to rein in swipe fees.

For these consumers, pay by bank offers a clearer connection between spending and available funds, while still fitting naturally into the digital banking experiences they already use every day.

America’s pay by bank network

Aeropay is built to help businesses easily add and scale bank-based payments. Our platform connects directly to more than 12,000 financial institutions, giving businesses a reliable way to accept pay by bank, move money faster, and reduce reliance on card networks.

Trusted by thousands of businesses to move billions of dollars, Aeropay helps scale secure bank connections, enable pay by bank at checkout, support instant payout, and reduce payment risk with built-in, intelligent risk tools.

See how pay by bank with Aeropay can work for your business.

Talk with our team to explore how you can lower payment costs, improve payment reliability, and offer customers a better way to pay.