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The Evolution of Open Banking & Pay By Bank?

By May 18, 2022August 9th, 2022No Comments

Pay By Bank…

is a new term used by PayGuard, and other financial companies, to explain a relatively new technology that allows you to easily, and with your customer’s permission, initiate bank transfer payments using the Faster Payments system.

Pay By Bank transactions, which are based on the Open Banking model are done in real-time and do not require a credit card or debit card number. This makes online checkout easier, faster, and safer than ever.

Given that there is increased competition in the banking solutions arena, Pay By Bank will help businesses offer a better customer experience and stand out from their counterparts.

Pay by Bank Lady Paying With Mobile
How do open banking payments help me

What Exactly is Pay By Bank?

It’s Simple

Making a Pay By Bank transfer is as simple for you, and your customer, as a credit or debit card payment with 3D Secure v2.

It Can Save You Money

If your Average Transaction Value is more than £25, you can save a lot of money. Pay By Bank payments have a fixed price, so the higher your ATV, the more you save.

No Fraud, Chargebacks, Reconciliation or Waiting for the Money

Yes, all the above! Eliminate chargebacks and fraud, reconcile each payment in real-time and receive the funds in seconds rather than days.

The Background & Evolution of Open Banking

The Evolution of Open Banking

Open banking is the process of granting access to customer banking data, including transactions, account data and payment history, to third-party payment service and financial service suppliers.

This cutting-edge evolution of open banking has made it easier for multiple parties in the financial and business arena to connect. Open banking connects banks, third parties, and technical service providers like PayGuard, so we can easily and safely share information that will help you and your customers.

The legislation that enabled open banking in the UK took effect on 13 January 2018, when the Payment Services Directive version 2 (PSD2) came into effect. This made it a requirement for all banks in the UK and Europe to allow secure access to bank information via API.

Approximately 600,000 small and medium-sized firms (SMEs) in the United Kingdom are presently using open banking technologies to enhance their operations.

Open banking makes it considerably simpler for new entrants to provide new goods and services and transforms the way some digital banking propositions function.

Pay By Bank uses the Payment Initiate Service of the Open Banking framework to initiate Faster Payment bank transfers.

Hundreds of Thousands
Every month hundreds of thousands of UK consumers and businesses become new active open banking users.

Making History
The adoption of Payment Initiate Services is happening faster than any new previous payment method adoption. API call volume increased from 70 million in 2018 to 6 billion in 2020.

The Nitty Gritty

First, you need a third-party provider. That’s where PayGuard comes in.

When a customer wants to pay, either online, over the phone, or via a link you have sent them, they go through a series of steps to authorise the transfer:

Bank Selection

Each transaction starts with the customer selecting their bank from a Bank Selection screen from PayGuard, either on their phone or computer.

Banking App

Well, the process is quite straightforward: the customers’ banking app is launched, they log in and are presented with the transaction to approve.

At all times, the customer’s account information is secure and is not shared. Also, you are not exposed to any sensitive information, and the process is just as easy as if a customer was authenticating a 3D Secure v2 debit or credit card transaction.

The detail of Pay by Bank

Pay By Bank with PayGuard

Our Record

PayGuard has partnered with the leading FCA regulated third party API aggregator in this space to bring you the most robust solution on the market. We processed more than £1.5 billion via Pay By Bank in January 2022.

Some organisations using our Pay By Bank infrastructure are:

  • HMRC
  • ITV
  • Anglian
With PayGuard, You Can…

PayGuard is the first company to offer Pay By Bank as a way to pay by phone. With this bank app option, you can also accept credit and debit card payments online or over the phone with PayGuard. This allows you to keep track of all your transactions in one place.

The Detailed Payment Flow Of Pay by Bank With PayGuard

Taking payments using Pay By Bank – In Practice

Pay By Bank Options

PayGuard can assist you in taking advantage of Pay By Bank in three distinct ways. You may choose one, two, or all three to assist you in lowering transaction costs, fraud, chargebacks, and extended settlement delays.

1) PayGuard Agent

Payments by bank are accepted in real-time by your employees through phone, online chat, email or social media channels by your team.

2) PayGuard Ecom

Provide your customers who are paying online via your website with the option of using a bank account in addition to, or in place of, credit and debit cards.

3) PayGuard Auto

Take full advantage of PayGuard’s Bulk Payments service, which allows you to receive Pay By Bank payments while you sleep by sending SMS or emails to a list of clients with unique payment URLs.

You receive the money within seconds, and you can use our auto-reconciliation service to reconcile each payment in real-time.

PayGuard Agent

Real-time Assisted Payments

Using PayGuard your staff can assist your customers in paying in real-time over the phone, via webchat, social media, by email or online. Our award-winning user interface means your staff don’t need training, and your customer’s experience is frictionless.

Phone Payments

Within the PayGuard Agent UI, on an interaction-by-interaction basis, your staff can choose whether to request your customer pay by credit card, debit card, ApplePay, GooglePay or Pay By Bank.

PCI DSS compliance comes out of the box, removing your premises, your call recordings and your staff from the scope.

When you accept phone payments using Pay By Bank, you may dramatically lower your transaction expenses while also eliminating chargebacks and fraud. In addition, the verification of the transaction is shown to your employees in real-time.

Pay By Bank transactions actually reduce user friction since 3D Secure v2 card payments need authentication via a bank application.

Join The Revolution

Moving forward, PayGuard is helping companies take advantage of the four simple and clear business benefits of receiving Pay By Bank payments online instead of traditional card payments. With PayGuard, you can offer your customers the choice.

Here is an example of our technology on HMRC’s website, offering the option for their payers to pay by card or Pay By Bank.

This website might as well be yours, and each time the Pay By Bank app is used, you save money, eliminate fraud and chargebacks, receive the money in seconds and automatically reconcile the payment.

Plus, you won’t have to wait for too long, since this could be your website in two weeks’ time.

HMRC Example of Pay by Bank

PayGuard Auto

Bulk Payments

Using PayGuard your staff can upload a list of contacts via CSV, along with their outstanding balances, and PayGuard can generate an email or SMS, for each contact, that provides them with a Pay By Bank option.

Get Paid While You Sleep

Once you have uploaded your contacts, PayGuard sends out Requests To Pay, and when a payment is made it is automatically reconciled.

Besides, there is no need to chase all contacts individually over the phone or send through generic card payment links, leaving scope for the payer to enter an incorrect reference or incorrect amount.

In the end, the time you may save is quite substantial.

QR Codes

Send QR codes via email to bulk recipients, and all they need to do is scan the QR code with their mobile, open their mobile banking app and authorise the payment. It’s simple and convenient for the payer, which helps to increase the number of payments you receive.

All The Things You Can Do…

Not Just Single Payments

PayGuard has developed several business banking services enabling you to make the most of Pay By Bank technology. When using PayBy Bank with PayGuard, you can:

  • Take scheduled payments and make refunds
  • Set up standing orders and receive Variable Recurring Payments (VRP)
  • Verify the identity of a customer in seconds using our AIS service
  • Instigate bulk payments, use QR codes on invoices or send them via email
  • Take payments over the phone, by email, via webchat, social media and online
  • Bank account through our partner Contis for real-time reconciliation
Blend Payment Methods

Payments by credit and debit card are also handled effectively by PayGuard. You can process both Pay By Bank and card payments using PayGuard, consolidating all of your transaction information and analysis into a single User Interface.


PayGuard can take between one to eight weeks to deploy depending on the service options you choose, although two weeks is the average.

  • No telephony integration is required.
  • Flexible contract terms to suit your needs.
  • User experience is simple, so your staff can jump straight in.

Overall, the open banking evolution represents the culmination of industrial and regulatory changes that are boosting financial sector competitiveness and Pay By Bank represents the ultimate phase of financial innovation.

Are you ready to gain access to the latest innovation brought by the Pay By Bank solution and take advantage in the evolution of open banking? Then please contact us to get you all set up!

Get in Touch to Find Out more...

To find out more, contact us using the form below. We are always happy to talk through your options and how PayGuard can help take your business to the next level!