Last updated: February 2025

Card payments have dominated ecommerce for decades, but open banking and AI-driven checkout are changing the economics. Here's what's driving the shift to account-to-account payments and what UK merchants should be doing about it now.

The card payment model was built for a different era

Cards were the right answer to the online payments problem in the late 1990s. The infrastructure existed, consumers understood how to use them, and the fraud and dispute mechanisms built into card networks provided enough consumer protection to make online buying feel safe. For two decades, cards were simply what online payments meant.

The conditions that made cards the obvious answer have changed. UK open banking infrastructure now makes direct bank-to-bank payments possible at checkout, authenticated to the same standard as online banking and settling in real time. AI is being applied to payment flows to reduce friction, predict failure points, and personalise the experience. The cost structure of card payments — layered fees, chargeback exposure, settlement delays — is increasingly visible as alternatives exist that don't carry those costs.

This isn't a prediction about a distant future. It's a description of what's already happening among UK merchants who have started building payment stacks that don't depend on cards for every transaction. This guide explains the mechanics of the shift, what account-to-account payments via open banking actually offer compared to cards, and what UK merchants on Shopify and WooCommerce should be thinking about now.

Quick summary

• Account-to-account (A2A) payments move money directly from a customer's bank account to a merchant's, using open banking infrastructure, without card networks as intermediaries

• Compared to cards, A2A payments offer real-time settlement, lower processing costs, no chargebacks, and bank-level authentication that reduces fraud exposure

• AI is being applied to open banking payment flows to reduce abandonment, improve authorisation rates, and personalise payment experiences — capabilities that card-based checkouts can't easily replicate

• UK open banking is already at scale: over 11 million UK consumers use open banking services monthly, and the infrastructure is mature, FCA-regulated, and growing

• For UK merchants on Shopify and WooCommerce, Pay by Bank via Fena is the practical entry point to A2A payments — adding bank-authenticated payment to checkout without replacing existing card and wallet options

• The merchants who benefit most from engaging with this shift now are those with high card processing costs, meaningful chargeback exposure, or strong motivation to improve checkout conversion on mobile

What account-to-account payments actually are

Account-to-account payments — often called A2A payments — are transactions where money moves directly from the payer's bank account to the payee's, without routing through a card network. In the UK ecommerce context, this is what Pay by Bank does: the customer authenticates a payment within their banking app, and the funds transfer directly using UK open banking payment rails.

The absence of a card network isn't a technical detail — it's the commercial difference. Card networks sit between the customer's bank and the merchant's bank, processing every transaction, enforcing rules, and taking a margin at each stage. That margin is why interchange fees exist. That enforcement capacity is why chargebacks exist. That clearing cycle is why card settlement takes one to three days rather than seconds.

A2A payments remove the card network layer. The payment is between two banks, authenticated by the customer, settled directly. The economics and the risk profile change at the same time.

The settlement advantage: real-time versus rolling cycles

When a customer completes a card payment on your Shopify or WooCommerce store, the money doesn't arrive immediately. It moves through a clearing cycle — typically one to three business days — during which the card network processes the transaction, the acquiring bank confirms it, and the funds eventually land in the merchant's account. On weekends and bank holidays, the timeline extends further.

For individual transactions, this is a minor inconvenience. Across a business processing hundreds of orders daily, it creates a persistent gap between earned revenue and available funds. Finance teams manage working capital around the settlement cycle, maintain larger reserves than they would otherwise need, and build forecasts on approximate inflow timing rather than confirmed cash positions.

A2A payments settle in real time. When a Pay by Bank transaction completes via Fena, the funds move immediately — the merchant's account reflects the payment within seconds of the customer's authorisation. There's no clearing window, no pending status, no rolling settlement batch. Revenue is available when it's earned, not days later.

The compounding effect over time is meaningful. For UK CFOs managing Shopify businesses, the improvement in cash flow predictability from real-time settlement is often a more significant operational benefit than the fee saving alone — particularly during periods of high volume where the float tied up in card settlement cycles represents a material sum.

The cost advantage: removing the card network layer

Card payments are more expensive than they appear on a pricing page. The headline rate — the percentage quoted by a gateway — bundles together interchange fees set by the card networks, scheme fees charged by Visa or Mastercard, and the acquirer's own margin. For UK consumer debit cards, interchange alone is typically 0.2%. For credit cards and commercial cards, it's higher. Scheme fees and acquirer margins add further on top.

These costs scale directly with revenue. A business processing £2M annually at an effective card rate of 2% pays £40,000 in processing costs. That's before chargeback fees, fraud prevention tooling, or the operational cost of dispute handling.

A2A payments remove the card network layer, which removes the largest single component of that cost stack. There's no interchange — because there's no card network to set it. No scheme fees — because Visa and Mastercard aren't in the transaction. What remains is the cost of the open banking infrastructure, which is structurally lower because it involves fewer intermediaries.

For merchants where payment processing cost is a material line item — high-volume retailers, low-margin categories, businesses where every basis point affects product viability — this structural cost difference is worth quantifying properly. The saving isn't uniform across all transactions, but it's consistent and it compounds with scale.

The fraud and chargeback advantage: authentication over credentials

Card fraud persists because the card payment model is built on credentials — a number, an expiry date, a security code — that can be obtained without the cardholder's knowledge or participation. Stolen card details can be used to make purchases remotely. Card testing attacks probe for valid credentials in bulk. And the chargeback mechanism, while protecting consumers, exposes merchants to post-transaction reversals that can arrive weeks after goods have been delivered.

A2A payments work differently at the authentication level. Pay by Bank requires the customer to actively authorise the payment within their own banking app, using the same credentials they use to access their account. The authentication is by the genuine account holder, confirmed by their bank, at the moment of payment. Stolen card numbers don't exist in this model because card numbers aren't part of the transaction flow.

The chargeback mechanism doesn't exist in A2A payments for the same structural reason: chargebacks are a card network construct, and A2A payments don't involve card networks. When a Pay by Bank transaction completes via Fena, there is no mechanism through which a card chargeback can be raised against it. For merchants where chargebacks are a recurring cost — in fees, in operational handling, and in the risk of elevated processing rates — this structural removal is significant.

Where AI changes the open banking payment picture

Open banking provides the infrastructure for A2A payments. AI is increasingly being applied on top of that infrastructure to improve how payments behave — and the combination creates capabilities that card-based checkouts struggle to replicate.

Checkout personalisation.

AI applied to payment flows can recommend the most appropriate payment method for each customer based on their history, device, and behaviour patterns. A returning customer with a stored preference for Pay by Bank sees that option prioritised. A first-time buyer on mobile sees the frictionless bank authentication flow. The checkout adapts rather than presenting a static menu of options.

Abandonment prediction and intervention.

Machine learning models trained on checkout behaviour can identify the signals that precede abandonment — extended inactivity, hesitation at the payment step, repeated field corrections — and trigger interventions before the customer leaves. This might be a timely reassurance message, a simplified payment option, or a prompt to switch to a faster method. Applied at scale, these interventions recover sales that would otherwise be lost.

Real-time affordability assessment.

Open banking data, with appropriate customer consent, provides a view of real-time financial position — account balance, income patterns, spending behaviour — that card payments can't access. AI applied to this data enables genuinely personalised payment options: instant payment for customers with the balance to support it, split payment for larger purchases, deferred options where appropriate. This is more useful and more responsible than blanket buy-now-pay-later offers because it's based on actual financial data rather than approximations.

Fraud detection without false positives.

AI fraud detection in card payments generates false positives — legitimate transactions blocked because they match fraud patterns. In open banking flows, the authentication itself is stronger (bank-level biometrics rather than card credentials), which reduces the false positive rate and the number of legitimate purchases that are blocked unnecessarily.

The UK open banking context

The UK is one of the most advanced open banking markets in the world, which matters for merchants evaluating whether A2A payments are a practical option now or a future aspiration.

Open banking was mandated in the UK in 2018 under FCA regulation, requiring the nine largest UK banks to open their payment infrastructure to regulated third-party providers. The result is a mature, well-supported payment rail that the major UK banks — Barclays, Lloyds, HSBC, NatWest, Starling, Monzo, and others — are required to support. Over 11 million UK consumers now use open banking services monthly, a number that has grown consistently and shows no sign of plateauing.

Globally, the trajectory is consistent. Instant payment systems processed $195 billion in 2022 and are projected to reach $1.6 trillion by 2027 (ACI Worldwide). European open banking payments are forecast to process over $330 billion annually by 2027 (Juniper Research). These figures reflect genuine adoption, not aspiration.

For UK merchants, this means the customer base for Pay by Bank is already substantial and growing. The infrastructure is regulated, reliable, and backed by institutions customers already trust. This is not an early-adopter bet — it's an increasingly mainstream payment option that a growing proportion of UK shoppers expect to see at checkout.

What this means for UK Shopify and WooCommerce merchants now

The shift from card-dominant to mixed payment stacks is happening gradually, not overnight. Cards will remain important for international customers, for fast impulse purchases where stored credentials provide the lowest friction, and for customers who simply prefer them. The practical question for UK merchants isn't whether to replace cards — it's where in their payment stack A2A payments via open banking deliver the most value.

Pay by Bank via Fena is the entry point for UK Shopify and WooCommerce merchants. It adds bank-authenticated A2A payment as a checkout option without requiring any change to existing card or wallet infrastructure. The integration is straightforward; the benefits begin on the first Pay by Bank transaction.

The merchants who benefit most from engaging with this now tend to share certain characteristics: meaningful card processing costs, recurring chargeback exposure, strong mobile traffic where card entry friction is highest, or business models — subscription, high-value, B2B — where Pay by Bank's specific advantages are most pronounced.

The broader trend is directional and accelerating. Merchants who build familiarity with open banking payment infrastructure now, and who begin to understand how their customers respond to Pay by Bank at checkout, will be better positioned as the balance continues to shift.

Frequently asked questions

What are account-to-account (A2A) payments?

A2A payments are transactions where money moves directly from the payer's bank account to the payee's, without routing through a card network. In UK ecommerce, this is delivered through open banking infrastructure — the FCA-regulated framework that enables direct bank-to-bank payment. Pay by Bank is the consumer-facing expression of A2A payments at checkout.

Are open banking payments better than card payments for UK merchants?

In specific and significant ways, yes. A2A payments via open banking offer real-time settlement, lower processing costs by removing the card network intermediary layer, no card chargeback mechanism, and stronger authentication through bank-level credentials. For merchants where card processing costs, chargeback rates, or settlement timing are material concerns, the advantages are clear. For fast impulse purchases or international customers, cards remain important.

How is AI being used in open banking payment flows?

AI is being applied to personalise payment method presentation at checkout, identify abandonment signals and intervene before customers leave, assess real-time customer affordability using open banking data to offer appropriate payment options, and improve fraud detection accuracy by combining stronger authentication with behaviour-based risk models. These applications are developing rapidly and increasingly differentiate open banking checkouts from static card payment flows.

Is open banking mature enough to rely on for UK ecommerce?

Yes. UK open banking has been operational since 2018 under FCA regulation, is supported by the major UK banks as a regulatory requirement, and is actively used by over 11 million UK consumers monthly. The infrastructure is stable, the regulatory framework is well-established, and consumer familiarity is growing consistently.

Will A2A payments replace card payments entirely?

Not in the near term, and possibly not at all for every use case. Cards remain well-suited for international transactions, one-click checkout for returning customers with stored credentials, and contexts where the familiarity and consumer protections of card payments are valued. The most realistic outcome is a payment mix that shifts progressively toward A2A for UK domestic transactions, high-value purchases, and mobile-first checkouts — with cards remaining important but no longer dominant.

How does Pay by Bank via Fena fit into this picture for Shopify and WooCommerce merchants?

Fena provides Pay by Bank as a checkout option for UK Shopify and WooCommerce merchants, operating under FCA authorisation on UK open banking infrastructure. It adds A2A payment capability alongside existing payment methods, delivers real-time settlement and no chargebacks on Pay by Bank transactions, and integrates without requiring changes to the rest of the payment stack. It's the practical route for UK merchants to begin capturing the benefits of the open banking payment shift now.