In 2024, the European B2B payments market was valued at more than USD 509 billion and is expected to reach more than 1.1 trillion by 2033, making it one of the biggest payment segments on the continent.
Meanwhile, in the EU and SEPA region, regulators continue to prioritize the availability and accessibility of instant digital payments. The European Parliament and Council reached an agreement in November 2025 on PSD3 and the Payment Services Regulation, marking the start of a new wave of regulatory change aimed at harmonizing payment services in the digital age.
Against this backdrop, Pay by Bank – an account-to-account (A2A) payment method enabled by Open Banking – has been gaining traction in recent years. By allowing businesses to authorize payments directly from their bank accounts, it moves funds between accounts without relying on traditional intermediaries.
As companies reassess their payment strategies amid tightening margins and growing transaction values, Pay by Bank is emerging as a way to improve efficiency, transparency, and operational control. In this article, we’ll explore how it compares to other payment methods and why it is becoming an increasingly compelling option for B2B payments.
Pay by Bank is an A2A payment method that allows a buyer to transfer funds directly from their bank account to the payee’s account in real or near-real time, without leaving the payment or checkout environment. It interacts directly with banks’ IT systems, removing the need for payees to manually set up the transfer from their online banking.
Once enabled, it appears as an option on standard payment interfaces (such as checkout screens, invoices, or links). The payer authorizes the transaction through their banking app using Strong Customer Authentication (SCA) just as they would for card payments and as required under PSD2, after which the funds are transferred directly to the recipient’s account.
Enabling this requires a partnership with a licensed PISP (Payment Initiation Service Provider) that uses Open Banking technologies to securely connect to bank accounts via APIs. Because Pay by Bank transactions are initiated directly from the user’s bank and authenticated within the bank’s own environment, sensitive card and account details remain secure. This greatly reduces intermediary involvement and exposure to fraud.
Beyond security, these transfers can help businesses reduce costs by eliminating card scheme interchange fees and traditional chargeback processes. In addition, by adding enriched remittance data –– such as invoice references or customer identifiers –– to each transaction, companies can lay the foundation for automated reconciliation within ERP and accounting systems.
The above table recaps the key differences in terms of transaction speed, operational complexity, user perception, and costs for Pay by Bank versus other payment methods like cards, SEPA Direct Debit, SEPA Instant, and classic SEPA wire transfers for the use case of B2B online payments in Europe.
Pay by Bank and traditional cards differ significantly across multiple factors, including cost structure, risk profile, and overall operational impact.
Card payments offer broad acceptance both within EU boundaries and across international borders. The embedded credit lines that cards can sometimes provide can support buyer flexibility and working capital management. The same considerations apply to debit card payments, which operate on the same card scheme infrastructure. However, for high-value B2B transactions, costs can quickly rise due to:
Costs can become especially significant at scale, with average merchant service charges around 0.44% for consumer cards and 1.18% for commercial cards in Europe, according to a 2024 European Commission study.
Chargeback is also a major risk in card-based payments, which can introduce the threat of disputes and delayed revenue recognition. Pay by Bank bypasses these fees and risks by using the direct account-to-account settlement model that comes with lower transaction costs and no chargeback mechanism.
In terms of security, exposure to unauthorized fraud is comparatively higher with card transactions due to their reliance on reusable payment credentials. In contrast, Pay by Bank leverages bank-level authentication and eliminates the need to store or transmit card data, reducing the overall attack surface.
Suppliers managing large invoices and cross-border collections can use Pay by Bank to improve their cash flow visibility and reduce reconciliation complexity, particularly for payments structured with embedded reference data.
Cards may remain advantageous where buyer credit is essential or where global acceptance outside SEPA is required. Pay by Bank is often better suited to domestic and intra-European B2B flows and can allow businesses to prioritize cost efficiency and settlement certainty.
The distinction between the two payment methods centers mainly on timing, payer control and mandate structure. SEPA Direct Debit is typically more suitable for established, ongoing commercial relationships with predictable billing cycles, such as:
Once a SEPA mandate is in place, payees can initiate collections automatically and reduce the amount of manual interaction needed at each billing interval. SDD is particularly effective for recurring collections where the payer is comfortable authorizing automated debits, including variable-amount invoices with no set expiration date.
Pay by Bank, on the other hand, works well when the payer wants to approve each payment individually rather than authorize an automated debit. This can include high-value or first-time payments, but also fixed recurring invoices where the beneficiary can prepare pre-filled payment requests for each billing period, with the correct amount and remittance information already included.
In this setup, Pay by Bank acts as a middle ground between SDD and manual bank transfers: the payer keeps control, while the payee reduces the risk of missed payments, incorrect amounts, or incomplete payment references.
Businesses collecting payments can therefore use Pay by Bank when they need more flexibility than SDD allows, especially for first-time relationships, cross-border collections, or payers reluctant to authorize automated debits. In SDD-heavy use cases, it can act either as an alternative to direct debit for fixed recurring invoices or as a complementary method for onboarding and failed collections.
Finally, while recurring and variable recurring Pay by Bank (PIS-based) payments are emerging, adoption remains uneven across Europe. The first is gradually becoming more widely supported by banks, whereas the latter is not yet fully operational in most Western European markets.
Wire transfers remain a standard for high-value, cross-border transactions, particularly outside the SEPA zone or in scenarios requiring SWIFT-level documentation and manual treasury control. However, they are operationally heavy, relying on manual input, correspondent banking chains, and fragmented reference data.
Pay by Bank offers a more efficient alternative for European B2B collections. Payments can be initiated directly from invoices or payment interfaces with pre-filled and structured data, reducing manual intervention and improving reconciliation accuracy. It also avoids intermediary banking chains, helping to reduce both delays and transaction costs.
As a result, while wire transfers remain relevant for exceptional or non-SEPA transactions, Pay by Bank is better suited to structured, repeatable B2B payment flows where efficiency and automation are priorities.
While evaluating Pay by Bank against other major payment rails, it is also important to clarify why certain methods are typically excluded from structured B2B payment strategies:
For European enterprises seeking scalable, automated, and cross-border-compatible payment workflows, these methods typically play a limited role compared to bank-based rails such as Pay by Bank, SEPA Direct Debit, SEPA Instant, and traditional wire transfers.