The largest retailers in the U.S. are quietly building checkout flows that bypass the card networks entirely. Instead of processing a Visa or Mastercard transaction — and paying the interchange fee that comes with it — they're letting customers pay directly from their bank accounts.
Walmart has been running bank-transfer payment options for some time. Kroger has followed. And Ahold Delhaize, the parent company of Stop & Shop, Giant, and Food Lion, has been expanding a bank-transfer checkout pilot across its chains.
For these companies, the motivation is obvious: interchange fees. The card networks charge between 1.5% and 3.5% on every transaction, depending on the card type, the merchant category, and whether the transaction is in-person or online. On the volume these retailers process, even a fractional shift away from cards represents enormous savings.
But this isn't just a big-box play. The same payment rails that power these programs are now available to mid-market merchants. And the economics are worth understanding.
What pay-by-bank actually is
Pay-by-bank (sometimes called A2A, or account-to-account payments) is exactly what it sounds like: the customer authorizes a payment directly from their bank account to the merchant's bank account. No card network in the middle. No interchange. No scheme fees.
The transaction runs over bank payment rails — in the U.S., that's primarily ACH, though real-time payment networks like FedNow and RTP are increasingly part of the picture. In the UK and Europe, open banking APIs have made this even more seamless: the customer authenticates with their bank, authorizes the payment, and the funds move directly.
The transaction cost for the merchant is dramatically lower. Where card processing might run 2.0–3.0% of the transaction, pay-by-bank typically costs 0.2–0.5% per transaction. On a $100 purchase, that's the difference between $2.50 in processing fees and $0.30.
Why it's accelerating now
Pay-by-bank has been technically possible for years. What's changed in 2025 and 2026 is a combination of infrastructure, regulation, and merchant willingness.
On the infrastructure side, faster payment rails have made the experience viable. Traditional ACH was too slow — funds took 2–3 business days to settle, which created cash flow uncertainty for merchants and a clunky experience for customers. Real-time payment networks close that gap. FedNow, which launched in 2023, enables instant settlement. The RTP network, operated by The Clearing House, does the same. When the payment settles in seconds instead of days, the merchant experience starts to resemble card processing.
On the regulatory side, open banking frameworks have made it easier for payment providers to access bank account data with customer consent. In the UK, over 15 million people used open banking services by 2025, and Amazon UK added Pay by Bank at checkout in 2026 through a partnership with TrueLayer. The EU has mandated 24/7 instant payment availability, which has forced banks to support A2A payment flows at scale.
In the U.S., adoption has been slower — there's no federal open banking mandate, and card rewards programs give consumers an incentive to stick with credit cards. But merchants are starting to push the option more aggressively because the cost savings are large enough to fund incentives. Some merchants offer small discounts (1–2%) for bank-transfer payments, which still leaves them ahead on net cost compared to card processing.
The economics for a mid-market merchant
Let's say you're processing $200,000 a month in card transactions at an effective rate of 2.4%. That's $4,800 a month in processing costs — $57,600 a year.
If you could shift 20% of that volume to pay-by-bank at a cost of 0.3%, your processing cost on that segment drops from $960/month to $60/month. That's $10,800 a year in savings, and you've only moved a fifth of your volume.
The math is straightforward. The question is whether your customers will use it.
Consumer adoption is the constraint. In markets where pay-by-bank is established — the Netherlands (iDEAL), Poland (BLIK), Scandinavia (Swish) — it's already the dominant payment method. In the U.S., it's still early. Most American consumers are habituated to cards, and credit card rewards programs create a genuine switching cost.
The merchants seeing the fastest adoption are those in categories where customers are already comfortable with bank payments: bill pay, subscriptions, high-ticket purchases, and B2B transactions. For these use cases, the friction of entering bank details is comparable to entering card details, and the savings can be passed through as a price advantage.
What this means for chargebacks
There's a secondary benefit that doesn't get enough attention: bank-to-bank payments have a fundamentally different dispute mechanism than card payments.
With card transactions, the chargeback process is well-established and heavily skewed toward the cardholder. The customer calls their bank, the bank reverses the charge, the merchant has to prove the transaction was legitimate. As we've covered elsewhere, the all-in cost of a chargeback runs 2x to 4x the original transaction amount.
Pay-by-bank transactions don't go through the card network dispute process. They're governed by ACH rules (in the U.S.) or banking regulations (in the EU), which have different timelines, burden-of-proof standards, and reversal mechanisms. ACH disputes are less common, harder for the customer to initiate, and generally resolved more favorably for the merchant.
This doesn't mean pay-by-bank is chargeback-proof. Unauthorized transactions can still be reversed under Regulation E in the U.S. But the volume and cost of disputes on bank-transfer transactions is significantly lower than on card transactions. For merchants in high-chargeback verticals, this alone may justify offering the option.
The practical considerations
Before adding pay-by-bank to your checkout, a few things to think about:
Settlement speed matters. If your provider is routing through standard ACH, you'll wait 1–3 business days for funds. If they support FedNow or RTP, settlement can be near-instant. The difference has real cash flow implications.
Consumer experience varies. The best implementations use open banking APIs that let the customer authenticate through their bank's app with biometrics — one tap and done. The worst require the customer to type in their routing and account numbers manually. The experience gap between these two approaches is enormous, and it directly impacts conversion.
Not all customers will switch. Offer pay-by-bank as an option alongside cards, not as a replacement. Let customers self-select. The ones who prefer it — or who respond to a small discount incentive — will use it. The ones who want their card rewards will keep paying by card. You'll still come out ahead on the portion that shifts.
Your processor may not support it. Many traditional processors don't offer pay-by-bank as an integrated checkout option. You may need a payment orchestration layer or a dedicated A2A provider alongside your existing card processor.
Where this goes
The major retailers aren't experimenting with pay-by-bank because it's trendy. They're doing it because interchange is one of their largest controllable costs, and bank-transfer rails offer a structural alternative. The infrastructure is now good enough to make the customer experience acceptable, and in some markets, preferable.
For mid-market merchants, the question isn't whether pay-by-bank is relevant. It's whether your payment setup gives you the option to offer it when the math makes sense.
