Is Pay by Bank the most underrated innovation in US payments?

For years, the US digital payment ecosystem has been centered around credit and debit cards, recently joined by evolving options like BNPL. Yet quietly, and with growing momentum, another contender has started reshaping the payment experience and it goes by many names.

Ask 10 people in the eCommerce industry what “Pay by Bank” means, and you’ll hear a mix of responses: ACH, account-to-account (A2A), direct bank transfer, online bank transfer, direct debit, real-time payments, Open Banking and more.

All these terms orbit the same concept - moving money directly from a customer's bank account to a merchant. However, they’re not entirely interchangeable, and, of all of them, Open Banking causes the most confusion. Now, the industry has started to align around a single, unifying term: Pay by Bank.

While this payment method has gained traction internationally, the US has remained cautious. Until now. Today, a convergence of regulation, technology, and consumer demand is positioning Pay by Bank to make a serious play for mainstream adoption in the US.

In this article, we explore the key differences between the terms used to mean paying by bank transfer, how it is reshaping the US eCommerce and digital goods industries, and the key benefits its adoption can bring to US busnesses and consumers.

What Pay by Bank is and what it isn’t

Pay by Bank refers to enabling customers to pay directly from their bank account — without entering card credentials or relying on intermediaries. The experience is often embedded, often one-click, and increasingly real-time.

In the US, it’s powered by:

• ACH (the longstanding, batch-based system that still processes over 31 billion payments annually),
• RTP® from The Clearing House, and
• FedNow, the Federal Reserve’s newest rail for real-time bank transfers.

These payments can be facilitated via APIs from providers like Plaid, MX, Finicity and many others — bringing us to Open Banking.

Open Banking, unlike Pay by Bank, is a framework. It refers to the use of secure APIs that allow third-party providers to access financial data and initiate payments, with consumer consent. In regions like the UK and EU, Open Banking is a regulatory mandate by now. In the US, it’s market driven.

While Open Banking can enable Pay by Bank, the two are not the same. You can have Open Banking use cases that don’t involve payments at all (financial insights, alternative lending or credit scoring). And you can have Pay by Bank use cases that don’t rely on Open Banking APIs.

Is the US finally ready for Pay by Bank?

The US payments space has been dominated by cards for almost two decades — entrenched by rewards programs, consumer protections, and legacy habits. But the ground is shifting. The economics of card payments have become harder to ignore: increasing processing fees, rising card fraud, and complex chargeback processes are prompting merchants and platforms to seek new rails.

At the same time, the infrastructure for Pay by Bank has quietly matured. With rails like ACH, RTP and FedNow gaining traction, and aggregator APIs simplifying bank connectivity, the experience is no longer clunky or inconsistent. Consumers can authorize a bank payment in seconds, leveraging their banking app, without re-entering credentials.

And our data shows it’s working. According to our research:

The highest levels of enthusiasm are coming from younger demographics — Gen Z, millennials, and bridge millennials — indicating a generational shift in preferences.

And the adoption curve is already underway. Last year alone, 18% of US consumers used online bank transfers to pay recurring bills, making it the third most common method after debit and credit cards.

What’s in it for merchants and platforms?

For merchants and SaaS providers that embed payment processing for their clients, Pay by Bank offers more than just an additional tender type, it brings a pathway to stronger margins and smarter customer engagement.

Bypassing card networks, Pay by Bank solutions:

• Eliminate interchange and payment network fees, materially reducing total cost of acceptance
• Mitigate first-party “friendly” fraud and chargebacks, since transactions are authorized via the customer’s bank
• Reduce certain types of declines, such as those related to expired cards or insufficient credit limits
• Improve the checkout experience - removing bank intermediaries with the end consumer making the payment, it provides for a more dynamic 1:1 UX

Moreover, it opens the door to new loyalty strategies. Our research shows that over 46% of consumers prefer cash as a reward for using Pay by Bank. That makes it possible for merchants to reinvest cost savings from card fees into meaningful incentives without eroding margins.

Platforms and ISVs embedding Pay by Bank into their software also benefit. They can offer clients more flexible payment options, gain visibility into transaction flows, and control more of the checkout experience, while tapping into Nuvei’s multi-rail infrastructure and network of banking partners for seamless orchestration.

Security, trust, and the fraud advantage

One of the most persistent myths about Pay by Bank is that it's less secure than card payments. But in reality, it’s more secure by design.

Because transactions are initiated through the consumer’s banking app or an authenticated API session, Pay by Bank:

• Requires multi-factor authentication by default
• Exposes no card data to merchants or third parties
• Is immune to stolen card or expiration-related fraud
• Mitigates "friendly" fraud and chargebacks

This is especially relevant in the US, where “friendly” fraud rates are among the highest globally, and where losses from card-related fraud continue to climb.

Yet, some consumers are still cautious — 34% cite security concerns, even after trying Pay by Bank. That gap is closing fast as more users experience the embedded, bank-authenticated flow for themselves. The more seamless and trustworthy the experience becomes, the faster adoption accelerates.

So, what’s holding it back? And what comes next?

As with any payment behavior, change takes time. It took decades for credit cards to become the default. Pay by Bank is still climbing that curve in the US.

But merchants can accelerate adoption by offering the three things that matter most:

1. An embedded, seamless experience

2. Visible incentives or rewards

3. Clear communication around security and trust

Uber is a recent example. The ride-hailing platform began offering Pay by Bank and incentivized adoption with 40% off future rides. Airbnb has also started supporting Pay by Bank for select transactions, signaling broader adoption by major consumer platforms.

 At Nuvei, we’re helping merchants and platforms unlock Pay by Bank with:

• Seamless payment credential enrollment and authentication via embedded Open Banking solutions
• Support for ACH, RTP, and FedNow from a single integration
• A multi-ODFI network for resilience and redundancy
• Payment flows tailored for eCommerce, B2B, and recurring use cases

 For merchants, ISVs, and financial institutions, the question isn’t whether to offer Pay by Bank. It’s how quickly they can turn it into their next competitive edge for accelerated revenue growth. In a market where terms like ACH, RTP, FedNow, and Open Banking are often used interchangeably, it’s easy to overlook what matters: building a payment strategy that works — for your business, your customers, and your bottom line.

Pay by Bank now is an efficient, and increasingly expected option inthe US payments mix. If you're navigating this space and looking to optimize your payment strategy for maximum growth, connect with our team.

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