Pay by Bank is working. Fragmentation Proves It.
By Todd Clyde, CEO of Token.io
Both Amazon and eBay have announced the introduction of Pay by Bank as a payment method in the UK. If there was ever any doubt, this signals that Pay by Bank is beginning to solidify itself as a mainstream global payment option.
Initially a “made in Europe” alternative to card payments, Pay by Bank is now a genuinely disruptive force, challenging traditional payment methods and offering faster payments, stronger security, and a simpler user experience.
A recent Token.io survey demonstrated that 91% of respondents reported strong merchant demand, while Open Banking Limited estimates a £4.4 billion opportunity. For UK businesses, Pay by Bank could unlock huge savings through lower transaction fees and improved reconciliation processes. This includes an estimated £331 million from online payments, £40 million from in-store transactions, £110 million from one-off bill payments, and £78 million from recurring billing.
Recent data from Open Banking Limited also shows Pay by Bank is a safer way to pay, with fraud rates 2.4x lower than payments industry norms. During 2025, approximately one in 6,000 open banking payments were fraudulent, compared with one in 2,500 across the broader payments industry.
Today, popular Pay by Bank use cases include credit card repayments, current account top-ups and savings account funding, with adoption set to expand significantly as new schemes emerge.
Yet as Pay by Bank scales, a familiar pattern is revealing itself: fragmentation.
Across the UK and Europe, multiple industry-led and regulatory-led Pay by Bank schemes have emerged, each bringing its own functionality, geographic reach, dispute frameworks and commercial models. In these regions, open banking regulation created a foundation for every use case, but not every capability that merchants, billers and consumers need, including recurring payment mandates and dispute resolution frameworks.
Multiple Pay by Bank schemes reflect a payments ecosystem maturing beyond a one-size-fits-all model; this is not a flaw but a sign of healthy competition. Fragmentation is the inevitable consequence of a market scaling at pace, yet the fragmentation competition causes needs to be addressed.
Looking at the financial challenges, as more Pay by Bank schemes emerge, payment service providers (PSPs) could find themselves needing to integrate with multiple networks, each with its own technical, operational and commercial requirements. This increases developmental costs, maintenance requirements and operational complexity.
If left unchecked, those costs risk being passed through the payments value chain, reducing some of the economic advantages that have made Pay by Bank so attractive. The industry should instead aim for greater efficiency, lower operating costs and wider adoption.
Limiting competition between schemes is not the goal, simplifying access to them is. Rather than integrating separately with every Pay by Bank network, PSPs can connect through a single infrastructure provider that enables access to multiple schemes via one integration. Those efficiencies can then be passed on to merchants, helping ensure that fragmentation drives innovation, not unnecessary cost.
Yet, the key is not to resist fragmentation, but to abstract both its technical and commercial complexity. Success is achieved for those that access multiple PBB schemes through a unified layer, benefiting from the reach and functionality of different networks without managing them directly.
Pay by Bank’s next chapter will be defined less by whether it succeeds and more by how the ecosystem scales. The rise of multiple schemes is evidence of a market attracting investment, innovation and competition, all hallmarks of a maturing payments category.
Fragmentation is therefore a sign of progress. The task ahead is to ensure that complexity is abstracted away, enabling PSPs and merchants to benefit from the reach of multiple schemes without the operational burden that comes with them.
About Todd Clyde
Todd Clyde is the CEO of Token.io and an experienced operator of Silicon Valley software companies. He has a 25-year track record of bringing groundbreaking technologies to market across e-learning, internet banking, mobile banking, and now open API banking. Token.io is his fifth technology startup, and he has successfully navigated four previous ventures to exit, including one valued at $2B. Todd joined Token.io in 2016 with a focus on modernising payments and accelerating the shift from traditional payment methods to Pay by Bank.
