As real-time payments and account-to-account (A2A) transfers gain global traction, the rise of Pay by Bank is emerging as a transformative force in payments.
Yet its potential is threatened by outdated infrastructure, argues Ed Dean, vice president of product at Nuvei.
Pay by Bank
Legacy systems holding back Pay by Bank
Dean likens the payments sector to gaming.
Just as players needed to upgrade from NES to Switch to access the latest games, merchants and payment providers must modernise infrastructure to enable Pay by Bank.
The payments industry has evolved from ACH to same-day ACH and real-time payments, with request for payment (RFP) on the horizon.
Pay by Bank is the next step in this natural progression, built on the foundations of A2A systems such as SEPA and Pix.
Legacy Systems
However, Dean warns that without robust upgrades, businesses risk missing out on its benefits: faster settlement, reduced fees, and improved cash flow visibility.
Legacy ERPs, gateways, and acquiring platforms often lack the interoperability needed to integrate disparate real-time payment formats across regions.
Modern payment providers are developing solutions to bridge these gaps and instil confidence in fund movement.
Dean emphasised that successful adoption of pay by bank requires a collective effort across the ecosystem: payment providers, ERP systems, e-commerce platforms, independent software vendors, and processors working together to enable seamless connectivity and data reconciliation.
For consumers, Pay by Bank adoption is set for a “natural progression” from discretionary to essential payments.
While e-commerce is the current frontier, offering an alternative to card payments and creating streamlined one-click experiences for returning users, utility payments represent a shift from consumer wants to needs.
When residents register with utility companies, entering account and routing information creates a trusted relationship, facilitating bill payments via pay by bank – turning it into a fundamental domestic payment method.
B2B Payments
In B2B payments, traditionally reliant on ACH and wire transfers, pay by bank offers enhanced security, vendor verification, and liquidity clarity for high-value transactions.
Dean described it as introducing a “light KYC” layer, giving businesses confidence that funds reach intended recipients swiftly and securely, reducing operational and fraud risks while optimising cash pipelines.
However, US adoption has lagged behind Europe and Latin America.
Consumer education remains a barrier, as pay by bank’s benefits are less tangible to individuals than to merchants. Dean suggested incentives such as convenience fee avoidance to encourage uptake.
Ultimately, Pay by Bank’s success will depend on modernising the underlying infrastructure to support real-time, integrated payments at scale.
As Dean concluded, it elevates traditional ACH into “a new generation of payments for a very old payment rail,” but only if the industry collectively upgrades its consoles to play the game.
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