Pay by Bank Finds Momentum as Consumers Rethink Cards

One of the U.S. payments industry’s unfulfilled promises is that bank-to-bank transfers would one day loosen the grip of cards.

The logic is straightforward: Moving money directly from a consumer’s bank account to a merchant should be faster, cheaper and more secure than routing payments through card networks designed for the 20th, not 21st, century. Yet despite this structural appeal, Pay by Bank remains stubbornly peripheral in the United States.

According to research in “Pay by Bank: Consumer Adoption Hinges on Security Concerns,” a PYMNTS Intelligence and Trustly collaboration, roughly 30% of U.S. consumers say they have used Pay by Bank in the past year, but the method accounts for just 1.5% of all consumer transactions.

Trial is widespread, apparently; but habitual use is not. That gap reveals where the real challenge now lies. The barriers are no longer technical but perceptual, behavioral, and even institutional.

Bridging the Trial-to-Habit Gap

Pay by Bank has already cleared the industry’s usual adoption hurdles. Consumers do not need to download new apps, open new accounts, or learn unfamiliar workflows. They encounter the method in contexts that already feel bank-like: paying utility bills, transferring money between accounts, or funding subscriptions. These are low-risk, low-friction moments, and consumers have responded accordingly.

What has not happened is default behavior. Debit cards, which offer minimal rewards and limited protections compared to credit cards, still account for roughly 30% of U.S. retail transactions. Their dominance reflects habit and trust more than innovation. Debit is familiar. Consumers know how disputes work, when funds leave their accounts, and what happens if something goes wrong.

Pay by Bank, by contrast, remains situational. Consumers use it when prompted but rarely seek it out. This distinction matters. In payments, the difference between a feature and an infrastructure is repetition.

Per the report, among the most significant barriers to broader adoption is not fraud performance but consumer belief. Nearly half of consumers who reject Pay by Bank say they believe using bank credentials is less secure than using a debit or credit card. This belief persists despite the fact that Pay by Bank transactions rely on encrypted connections, bank-authenticated logins, and do not expose credentials to merchants.

This is a classic perception gap. Cards benefit from decades of consumer education, regulatory clarity, and widely advertised zero-liability protections. Pay by Bank has none of that narrative infrastructure. For many consumers, the act of logging into a bank account feels more intimate and therefore riskier, even when it is technically safer than entering card details.

Read the report: Six in 10 Consumers Say They’re Ready to Switch to Pay by Bank

Economically, Pay by Bank offers consumers a discount by eliminating interchange fees that merchants pass on through pricing. The problem is that this savings is invisible. Behavioral economics is unforgiving on this point: abstract or indirect benefits rarely change behavior.

Roughly 6 in 10 consumers say they would shift some transactions to Pay by Bank if offered buyer protections and a modest discount, such as 1%. Among digital wallet users, openness is even higher. These incentives do not need to be generous. They need to be legible.

Still, the report flagged that a persistent strategic error has been positioning Pay by Bank as an alternative to credit cards. Credit cards succeed not just because of rewards but because they provide liquidity. For consumers who carry balances, credit is a financing tool, not simply a payment mechanism.

Pay by Bank cannot compete on that axis, nor should it try. Its true analog is debit. Both draw directly from bank accounts. Both settle without extending credit. Yet only a small share of debit card users currently see Pay by Bank as a substitute.

The challenge is not persuading consumers that Pay by Bank works, but convincing them that it is safe, fair and worth repeating. The rails are in place, connectivity is broad, and consumer awareness is substantial. What remains is the slower work of institution-building: education, guarantees and reframing.

At PYMNTS Intelligence, we work with businesses to uncover insights that fuel intelligent, data-driven discussions on changing customer expectations, a more connected economy and the strategic shifts necessary to achieve outcomes. With rigorous research methodologies and unwavering commitment to objective quality, we offer trusted data to grow your business. As our partner, you’ll have access to our diverse team of PhDs, researchers, data analysts, number crunchers, subject matter veterans and editorial experts.