The Last Mile Problem: Why UK Open Banking Payments Will Be Won or Lost at the Checkout Button
The rails are built. The prices are lower. The regulation is close to settled. So why is Pay by Bank still losing the click? An argument that the next phase of the category will be decided by checkout design, not technology.
UK open banking payments crossed 351 million transactions in 2025 and the regulatory framework is largely settled, but adoption at the ecommerce checkout is now bottlenecked by user experience design rather than technology or pricing. The merchants converting Pay by Bank at meaningfully higher rates than the category average are the ones treating button placement, copy, and return-visit recall as first-class product decisions. Whoever solves the merchant-side education gap will define the next phase of the category.
The rails are built. The prices are lower. The regulation is, finally, close to settled. So why is Pay by Bank, the consumer-facing brand for UK open banking payments, still losing the click?
If you read only the headline numbers, you would conclude the war is already over.
Variable Recurring Payments for sweeping nearly doubled. Eight years on, account-to-account payments have stopped being a regulatory experiment and started behaving like infrastructure.
But there is a quieter number sitting underneath all of that, and it is the one the industry has spent surprisingly little time talking about. It is the checkout conversion rate.
Industry benchmarks suggest first-time Pay by Bank users in mature markets convert at 80 to 90 percent, with returning users above 90 percent. That sounds healthy until you sit with a merchant for an hour and watch what actually happens at their checkout. The headline rate is measured from the moment a user has already selected the option as their payment method. It does not capture the more important earlier decision: whether the user picked the account-to-account route at all. In the live data I see across UK merchants, the gap between Pay by Bank being offered and Pay by Bank being chosen is the single largest unsolved problem in the category. Everything else, including pricing and settlement, is downstream of it.
“This is the last mile problem. It will decide whether open banking payments break out of their current single-digit share of UK ecommerce checkouts, or plateau there.”
The Rails Have Outrun the Checkout Experience
The technical story of UK open banking is, by 2026, genuinely impressive. Open Banking Limited reports that average API response times ended 2025 at 324 milliseconds, the fastest on record. Around 95 percent of UK Faster Payments settle in under 15 seconds. The first commercial Variable Recurring Payment was processed in November 2025, and the FCA has signalled that it expects industry-led adoption of cVRPs to inform a long-term regulatory framework decision by the end of 2026. HM Treasury is preparing to grant the FCA new powers to set open banking rules. The Data (Use and Access) Act 2025 has placed open banking inside a statutory smart data framework that finally gives the ecosystem a permanent commercial model.
The engineering case is closed. What remains is a behavioural case the industry has been remarkably slow to fight.
When a UK shopper arrives at an ecommerce checkout, they are presented with a familiar visual hierarchy: a primary card field, often pre-filled, followed by Apple Pay or Google Pay, and then, somewhere below the fold or behind a “more options” toggle, a Pay by Bank button. The merchant has no immediate commercial reason to highlight the cheaper rail, because the percentage points they save are invisible in a standard UX A/B test. The payment provider, often a card-first acquirer that has bolted open banking onto an existing flow, has no incentive to push customers toward a rail that earns it less per transaction. And the customer, presented with a route they have used a thousand times and a route they may have used twice, does the rational thing.
This is not a technology failure. It is a defaults failure, and it is fixable.
What the Merchants Getting This Right Actually Do
Across the UK merchants converting Pay by Bank at meaningfully higher rates than the category average, three things tend to be true at once.
The button is at the top of the payment stack
Position is doing more work than logos. Where Pay by Bank sits beside Apple Pay rather than below it, selection rates rise sharply. Where it sits below a pre-filled card form, it does not.
The copy stops trying to explain open banking
Customers do not need to know they are using a regulated API. They need to know what happens in the next ten seconds. “Pay directly from your bank, no card needed” outperforms anything that mentions “instant” or “account to account.”
The return journey is reused
The single largest conversion lift comes from remembering which bank the customer used last time and surfacing it as a one-tap choice on their next visit. The technical work to do this is trivial; most providers simply have not.
The clearest test I have seen came from a mid-sized WooCommerce merchant moving Pay by Bank from the third position in their checkout to the first. Selection more than tripled within a fortnight, with no change to the underlying flow. The industry has, in aggregate, fallen in love with explaining its own plumbing when it should be moving a button.
The Education Gap Nobody Owns
Sitting beneath all three of those observations is a structural problem the industry has been quietly ignoring: the merchant-side education gap.
When card payments became standard, merchants did not need to learn anything. The acquirer arrived with a terminal, the terminal worked, and the checkout flow was identical to every other merchant’s. Open banking is different. The rail is open, the providers are many, and the merchant is suddenly responsible for decisions that used to be made for them, including button placement, copy, fallback logic, and recurring payment design. Very few SMB merchants have the resources to make those decisions well. Very few payment providers have built the educational scaffolding to help them.
At SSV SmartPay we recognised early that this was the gap that mattered. The integration itself is straightforward, and most WooCommerce merchants are technically live within an hour. The decisions that determine whether the rail actually performs, where the button sits, what it says, how recurring billing customers should be migrated, take longer and sit outside the merchant’s normal expertise. So we contact every new merchant directly, walk through their checkout, and treat the conversation as part of onboarding rather than as optional customer success.
“The technology is the easy part. The category will be won or lost on whether providers treat merchant education as a product feature or as a marketing afterthought.”
The Next 18 Months
The interesting regulatory question for the rest of 2026 is not whether commercial VRPs will work. They will. The first wave, covering regulated financial services, utilities, and government payments, is already in motion. The second wave, covering ecommerce, is being designed now by UK Finance with support from Deloitte. The interesting question is whether the merchant-facing UX that surrounds these rails will be designed by people who think like product managers or by people who think like card processors.
Which way it goes leads to two very different outcomes.
The rails are no longer the bottleneck. The button is.
Frequently Asked Questions
Why is Pay by Bank still losing the click at checkout?
Not because of technology or pricing, both of which are strong, but because of checkout design. Pay by Bank is usually placed below a pre-filled card form or behind a “more options” toggle, so shoppers reach for the familiar card route. It is a defaults problem, and it is fixable by treating button placement, copy, and return-visit recall as product decisions.
What do merchants with high Pay by Bank conversion do differently?
Three things at once: they put the Pay by Bank button at the top of the payment stack rather than the bottom, they use plain copy like “Pay directly from your bank, no card needed” instead of explaining open banking, and they remember which bank the customer used last time and surface it as a one-tap choice on the next visit.
How fast do UK open banking payments settle?
According to Open Banking Limited, average API response times ended 2025 at 324 milliseconds, and around 95 percent of UK Faster Payments settle in under 15 seconds. The engineering case for open banking payments is effectively closed; the remaining challenge is the checkout experience.
Continue exploring SSV SmartPay
References
- Open Banking Limited, “Open Banking in 2025: Now Part of the UK’s Everyday Financial Life,” February 2026.
- Open Banking Limited, “New analysis reveals £43bn annual open banking opportunity for the UK economy,” March 2026.
- Open Banking Limited, “Open Banking surges to 15 million UK users as July marks record adoption,” September 2025.
- The Payments Association, “The state of open banking payments in the UK in 2026,” February 2026.
- Tink, “Everything you need to know about Pay by Bank conversion rates,” benchmark data 2022 to 2025.
- British Retail Consortium, UK card processing fee analysis, 2024 and 2025.
- TechRepublic, “UK Open Banking Celebrates 8th Anniversary With 16M Users,” January 2026.
- Ecommpay and IMRG, “eCommerce Checkouts: UK Retailers Reveal Their Checkout Strategy and Performance,” via The Paypers.
- SSV SmartPay, “Open Banking Trends: How Will Payments Be Structured in 2026,” available at ssvsmartpay.co.
- SSV SmartPay, “The Future is Open: How the FCA’s New Vision for Open Finance Empowers SSV SmartPay Merchants.”
About the author
Liliia Liehkova leads Digital Marketing and Social Media development at SSV SmartPay, a UK-based open banking and Pay by Bank payments platform headquartered in Canary Wharf, London. SSV SmartPay offers WooCommerce and direct-integration merchants a flat 0.5 percent transaction fee (20p under £50), and sits within the SSV Capital group. The views expressed are the author’s own.
Important information
Opinion piece. This article reflects the author’s own analysis and views, not formal guidance. Figures on transactions, users, settlement times, and economic opportunity are drawn from the cited sources and reflect the position at the time of writing.
Forward-looking statements. Comments on VRPs, regulation, and future adoption are projections and expectations, not guarantees. Regulatory timelines in particular can change; check the FCA and Pay.UK for the current position.
SSV SmartPay terms. Full pricing, terms, and conditions are available at ssvsmartpay.co/our-pricing. SSV SmartPay Limited is registered in England and Wales (CRN 15424021). SSV SmartPay is not directly FCA-regulated; payment initiation services are provided by FCA-authorised Payment Institution partners.
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Start free trial Book a demo Or get in touch with the team →Frequently Asked Questions
Why is Pay by Bank still losing customers at checkout?
Pay by Bank is often placed below card details, digital wallets, or behind a “more payment options” menu. Customers therefore choose the more visible and familiar card option, even when Pay by Bank may be faster or more cost-effective for the merchant.
Where should the Pay by Bank button appear?
The Pay by Bank button should appear near the top of the payment options, ideally alongside other prominent methods such as Apple Pay or Google Pay. It should not be hidden below a long card form or placed behind an additional menu.
What wording should merchants use for Pay by Bank?
Merchants should use simple, outcome-focused language such as “Pay directly from your bank — no card needed.” Customers do not usually need technical explanations about APIs, account-to-account payments, or open banking infrastructure.
How can merchants improve Pay by Bank conversion for returning customers?
Merchants can make the return journey easier by remembering which bank the customer selected previously and displaying it as a quick payment option during their next visit. Reducing repeated steps can improve convenience and conversion.
Does Pay by Bank work with WooCommerce?
Yes, Pay by Bank can be integrated into WooCommerce through a compatible payment provider or plugin. Merchants should also review where the payment option appears and how it is described, rather than treating the technical integration as the final step.
What are the most important Pay by Bank checkout optimisation steps?
The three most important steps are placing Pay by Bank prominently, using clear customer-friendly wording, and simplifying the experience for returning customers. These changes address the point where customers decide which payment method to use.
