Hot on the heels of Amazon, eBay has announced the introduction of Pay by Bank as a payment method in the UK. If there was ever any doubt, this signals that Pay by Bank is no longer an emerging concept, it is now firmly mainstream and rapidly becoming a global payment option.
What began as a “made in Europe” alternative to card payments is now a genuine disruptive force. Pay by Bank offers a compelling proposition: faster payments, stronger security, and a simpler user experience, all while challenging the long-standing dominance of traditional payment methods. And adoption is accelerating quickly. In a recent Token.io survey, 91% of respondents reported strong merchant demand, while Open Banking Limited estimates a £4.4bn opportunity.
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For UK businesses, the potential is significant. Over the next five years, Pay by Bank could unlock substantial cost savings driven by lower transaction fees and improved automation in reconciliation. This includes an estimated £331m from online payments, £40m from in-store transactions, £110m from one-off bill payments, and £78m from recurring billing.
New Pay by Bank schemes
Today, popular Pay by Bank use cases include credit card repayments, current account top-ups and savings account funding. However, in the coming months, adoption is set to expand significantly across a range of new sectors and use cases as new Pay by Bank schemes emerge.
The next big use cases for Pay by Bank in the UK, for example, include automated e-money account top-ups and everyday consumer transactions such as mobile, fixed-line and broadband bills, utilities including gas, water and electricity, pension scheme contributions, cultural attractions and institutions, charitable donations, and train ticket purchases.
As Pay by Bank scales, a familiar pattern is beginning to emerge: fragmentation
Across the UK and Europe, multiple industry-led and regulatory-led Pay by Bank schemes have emerged, or are in development: the UK Payments Initiative, giroAPI and S-Payments, to name a few. Each brings its own functionality, geographic reach, dispute frameworks and commercial models. While this reflects a healthy level of innovation and competition — evidence that the market is responding to real demand for Pay by Bank — it is also creating a more complex ecosystem.
In the UK and Europe, open banking regulation created a foundation. What it did not create was a finished product for every use case. Industry-led schemes emerged precisely because merchants, billers, and consumers asked for and needed more from Pay by Bank, such as recurring payment mandates and dispute resolution frameworks.
Each new Pay by Bank scheme represents a market signal. A scheme focused on recurring and automated payment functionality in the UK solves different problems than one built to deliver analogous functionality for the German market. The fact that multiple Pay by Bank schemes will exist reflects a payments ecosystem maturing beyond a single, one-size-fits-all model; this is not a design flaw, rather, it is what healthy competition looks like. Multiple providers are investing, differentiating, and building because the underlying opportunity is large enough to support it.
It is worth pausing to consider what the alternative looks like. Card payments achieved global scale through the concentration of infrastructure into two dominant networks. That consolidation eliminated fragmentation — but it also eliminated meaningful competition on infrastructure, pricing, and innovation for decades. Merchants accepted the trade-off because there was no viable alternative.
More complex but better outcomes
Pay by Bank is taking the opposite path. Rather than consolidating into a single scheme, the market is producing multiple approaches — each optimised for different geographies, use cases, and commercial realities. This is more complex, but it is also how open markets drive better outcomes.
Fragmentation is the inevitable consequence of a market scaling at pace, but it does create operational challenges for payments providers looking to deliver seamless Pay by Bank experiences to merchants and consumers.
On the one hand, multiple competing Pay by Bank schemes can drive innovation, and expand payment choices for consumers and businesses. But managing multiple Pay by Bank schemes introduces complexity, impacting the ability of merchants, fintechs, and payment providers to scale efficiently.
It’s easy to see a future where payment providers supporting Pay by Bank across the UK and Europe need to integrate with many schemes, each with its own technical specifications and APIs.
Yet, the key is not to resist fragmentation, but to abstract it. The organisations that will succeed are those that access multiple Pay by Bank schemes through a unified layer, benefiting from the reach and functionality of different networks without managing them directly.
This requires an infrastructure partner that simplifies integration, harmonises rules, standardises payment flows where possible, and enables scalability across markets.
One of the most significant structural shifts in modern payments
Pay by Bank is on track to become one of the most significant structural shifts in modern payments. Multiple participants competing to deliver innovative Pay by Bank functionality that delivers the best outcomes should be viewed as a positive sign that the market is maturing beyond its open banking origins into something even more robust.
If managed effectively, the next phase of market maturity has the potential to deliver truly innovative Pay by Bank experiences that expand competition and drive better outcomes for businesses and consumers. If not, fragmentation risks slowing down what is otherwise one of the most promising innovations in the evolution of global payments.
Pay by Bank is fragmenting because the market is working. The job now is to future-proof for a multi-scheme world — with a partner whose infrastructure ensures fragmentation never becomes a barrier to scale.
Todd Clyde, CEO of Token.io
