Amazon UK has launched a Pay by Bank feature. This may look like just another Alternative Payment Method, but strategically it signals something bigger: a controlled test of account-to-account (A2A) payments inside one of the world’s most optimised checkout experiences.
In payments language, consumer payment methods that are not traditional card rails are often grouped under the term Alternative Payment Methods (APMs). Pay by Bank sits within that category alongside wallets like PayPal etc and other such payment methods.
This new payment method relies on Open Banking infrastructure. Rather than Amazon connecting directly to every bank, Amazon will use TrueLayer (Source) aggregating these bank integrations and provide orchestration and payment initiation capabilities.
Visa also operates in the Open Banking ecosystem through its acquisition of Tink, which offers data and payment initiation services across Europe.
Why this matters for checkout strategy
Amazon’s motivations likely align around four core objectives:
- Seamless checkout journeys: minimise friction while preserving strong authentication
- Lower acceptance costs: diversify away from pure card economics
- Faster refund experiences: leverage Faster Payments for near real-time returns where possible
- Fraud and risk optimisation: shift parts of authentication toward bank-led SCA (Strong Customer Authentication) journeys
This is not about replacing cards. It is about expanding Amazon’s multi-rail strategy and testing where A2A delivers operational advantages.
This is how the UX looks like:
Some key notable implications from this move:
- Deliberate pivot towards A2A payments
- Pay by Bank bypasses traditional card rails and interchange economics by moving money directly from the customer’s bank account to Amazon, which can materially reduce transaction fees and speed up settlement
- This is a clear signal that Amazon wants more volume on non‑card rails where it can negotiate economics
- However, it does not remove intermediaries entirely. Open Banking providers, banks, and Faster Payments infrastructure still sit in the value chain. The shift is economic and architectural
- APM diversification through local optimisation
- Amazon is adding Pay by Bank alongside cards and wallets, not replacing them, which shows a multi‑rail APM strategy: cards, wallets, and now local open‑banking A2A where it’s mature (like the UK)
- This follows Amazon’s broader pattern of tailoring payment methods to local market infrastructure and regulation rather than a one‑size‑fits‑all stack.
- Control over UX and limiting sensitive data handling
- Customers never enter card details on Amazon for this method; they just link a bank once and then authorise via their banking app, with potentially near-instant refunds via Faster Payments
- This lets Amazon design a tight checkout and refund UX while still leveraging banks’ authentication and regulatory protections, and it reduces the operational friction of card expiry and credential updates
- It also subtly shifts authentication responsibility away from network driven flows like 3DS toward bank-led authorisation experiences.
- Foundation for recurring payments - Like Amazon subscriptions
- A logical next step could be extending Pay by Bank into recurring use cases such as Prime membership or digital subscriptions
- If recurring A2A for Prime works well, Amazon will have a template for shifting more subscription‑like flows (Prime, digital services, potentially BNPL repayments) off cards over time
- Risk ownership and dispute dynamics change
- Cards bring established chargeback frameworks and scheme rules. A2A payments operate differently: disputes, refunds, and liability models shift closer to merchant processes and bank policies
- Support for regulatory goals
- The launch is aligned with broader UK regulatory momentum encouraging A2A innovation promoting broader use of A2A in e‑commerce to improve competition and reduce costs
- Also comes at the back of discussions on UK Banks and regulators proposing alternatives to US card schemes - Visa and Mastercard
Amazon’s Pay by Bank launch should be viewed as a strategic experiment rather than a replacement for cards. Cards still offer global reach, dispute protection, and mature acceptance infrastructure. But large merchants increasingly want flexibility across multiple rails.
The story is not that Amazon launching a new payment method. The story is that checkout is becoming multi-layered with Cards, Wallets, Pay-by-Bank along with other payment methods all competing for consumer usage while each method having ecosystem implications for each stakeholder involved.