Why UK Open Banking "Pay by Bank" Hasn't Seen the Expected E-Commerce Uptake in 2025
Launched with high expectations in 2018, UK open banking promised to revolutionise payments with secure, low-cost account-to-account (A2A) transfers, commonly branded as "Pay by Bank." Yet, as we reach the end of 2025, its adoption in e-commerce remains modest compared to initial forecasts, particularly for Shopify merchants.
While open banking payments have grown to around 30 million monthly transactions, they represent only a small fraction of the UK's trillions in annual card volumes, with e-commerce penetration still in low single digits.
The UK Reality: Strong Growth, But Limited E-Commerce Impact
Open banking has seen impressive overall progress: over 15 million active users (nearly one-third of UK adults) and accelerating payment volumes. Variable Recurring Payments (VRPs) and initiatives like the UK Payments Initiative are paving the way for broader use. However, in e-commerce, where frictionless, one-click experiences dominate, Pay by Bank lags.
Key Challenges
Competition from Seamless Digital Wallets
Apple Pay and Google Pay have exploded in popularity, with over 57% of UK adults registered for mobile wallets in 2025 (up from 42% previously). These offer one-tap, biometric-secured checkouts without redirecting users away from the merchant site. Shop Pay, Shopify's accelerated checkout, further streamlines repeat purchases for millions of users.
Checkout Friction
Pay by Bank often involves redirects to banking apps, multi-step authentication, and potential drop-offs, contrasting with the instant familiarity of cards or wallets.
Consumer Trust and Awareness
While secure, many shoppers prefer established methods with clear chargeback protections.
For Shopify merchants, native integrations favour cards, Apple/Google Pay, and Shop Pay, making open banking additions feel secondary.
Contrasting Success Stories: Pix in Brazil and iDEAL/SOFORT in Europe
Other markets show how open banking-style payments can dominate e-commerce when conditions align.
Brazil's Pix
Launched in 2020 by the Central Bank, Pix exploded to over 7 billion monthly transactions by late 2025, often via simple QR codes. It now holds ~40% of e-commerce share, driven by central mandate, zero fees for consumers, instant settlement, and mobile-first design. Pix overtook cards rapidly due to inclusivity and government promotion.
Europe's Leaders
iDEAL in the Netherlands commands 60-70% of online transactions, embedded seamlessly in banking apps since 2005. SOFORT (now Klarna's Pay Now) achieved strong adoption in Germany and beyond for direct bank payments. These succeeded through early mandates, cultural preference for bank transfers, and minimal friction.
Key Success Factors
- Pix: Central bank mandate, zero consumer fees, instant settlement, QR code simplicity
- iDEAL: Early adoption (2005), seamless banking app integration, cultural preference
- SOFORT: Strong German market penetration, trusted direct bank payment method
Looking Ahead: Potential for Pay by Bank
With commercial VRPs coming and global A2A projected to hit 9% of e-commerce by 2030, Pay by Bank could gain traction as costs rise for cards and wallets evolve. Shopify integrations (via apps like Boodil) are improving access.
Final Thoughts
UK Pay by Bank hasn't disrupted e-commerce as hoped due to fierce competition from ultra-convenient wallets like Apple Pay, Google Pay, and Shop Pay, prioritised by consumers and platforms like Shopify. Unlike Pix's explosive, mandated rollout or iDEAL's entrenched position, UK adoption has been gradual.
Yet, with regulatory tailwinds, 2026 could mark a turning point for cost-conscious merchants seeking alternatives.
Ready to explore Pay by Bank for your UK store?
Discover how Boodil's open banking solutions can help reduce transaction costs and improve your checkout experience.
View UK Shopify Solution