The Deep dive: Pay by Bank eyes wider adoption

By Puja Sharma

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Token.io and Open Banking Expo’s annual ‘Pay by Bank Signals & Trends’ survey highlights demand for recurring and 1-click Pay by Bank, stronger point-of-sale capabilities and a clear role for PSPs in scaling adoption.

Pay by Bank is gaining traction, with one of Europe’s most widely used online marketplaces, AliExpress, now accepting Pay by Bank at checkout in the UK, France, Spain and Germany, and platforms including Octopus Money now enabling customers to fund pensions and investment accounts directly from their bank accounts. However, the industry believes further progress depends on making it easier for all merchants to offer and consumers to use. New findings from the annual ‘Pay by Bank Signals & Trends’ survey, from leading Pay by Bank infrastructure provider Token.io and Open Banking Expo, point to growing demand for capabilities that would allow Pay by Bank to compete more effectively with cards, from recurring and 1-click payments to acceptance at the point of sale.

The report summarises the survey responses of banks, payment service providers (PSPs), third-party providers (TPPs), merchants and industry observers across a variety of countries, but mostly those operating in the UK and Europe. Among respondents, 72% of banks and 87% of PSPs said they already offer or accept Pay by Bank.

59% of respondents said recurring payment and 1-click capabilities are essential for Pay by Bank to become a genuine alternative to cards in Europe. Subscriptions and bill payments were identified as the biggest opportunity to displace existing payment methods (62%), followed by e-commerce (59%). The findings point to demand for convenient everyday payments, with wider adoption dependent on schemes and infrastructure capable of delivering these capabilities at scale.

Who is under the radar?

In the UK, 89% of respondents said they were already seeing merchant demand for commercial variable recurring payments (cVRPs): Recurring Pay by Bank or 1-click Pay by Bank (express checkout) capabilities, enabled by the launch of a new payment scheme, UK Payments Initiative, in June 2026. As adoption develops, a strong majority of respondents indicated a clear and consistent consumer brand for cVRP could help build awareness, understanding and confidence in this new payment option. Separately, regarding Pay by Bank more broadly, 84% of respondents across all markets said a unified brand would help drive adoption, rising to 93% in the UK, where 49% considered it critical.

Point-of-sale capabilities emerged as one of the most important factors needed for Pay by Bank to become a genuine alternative to cards and other payment methods in the UK. Bringing Pay by Bank to the till would close one of the most visible gaps with cards, extending its reach beyond online payments and giving consumers another way to pay in physical retail. Ultimately, wider availability at the point of sale will be key to making Pay by Bank a more familiar and accessible payment option.

Todd Clyde, CEO at Token.io, commented: “The value proposition for Pay by Bank has long been understood across the payments ecosystem, and our survey shows that merchants are increasingly recognising its potential across a broad range of use cases. From subscriptions and bill payments to eCommerce and B2B, we’re seeing growing demand for Pay by Bank at the checkout.

“The opportunity now is to make Pay by Bank easier for merchants to offer and consumers to use. Recurring and 1-click payments, wider acceptance, and strong PSP partnerships will be key to helping Pay by Bank compete with established payment methods.”

Why does it matter now?

The survey points to the importance of established payment partners in scaling adoption. 61% of respondents said PSPs and payment gateways are the best channel for merchants to source Pay by Bank, compared with around a quarter who favoured direct relationships with open banking providers. With 84% reporting merchant demand, the findings reinforce the role of PSPs and payment gateways as the natural route to market for Pay by Bank, putting it in the same commercial stack as cards and making it available through the existing payment infrastructure merchants already rely on.

However, survey results also highlighted growing competition for PSPs. More than a third of PSP respondents said they knew of merchants bypassing them to work directly with open banking providers offering Pay by Bank. As a result, 45% of PSPs viewed open banking providers as a significant or growing competitive threat.

The survey also highlighted the need for clarity around consumer protection when Pay by Bank payments go wrong. While respondents differed on who should be responsible for resolving issues and covering losses, the findings point to the value of a central scheme with clear rules and an efficient resolution process, rather than placing the responsibility on a single participant in the payments chain.