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Pay by Bank App And How It Works

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Last editedMar 20222 min read

Mastercard’s Pay by Bank App enables merchants to take one-off payments with immediate confirmation of payment. From a consumer perspective, it has a very similar look and feel to GoCardless’ Instant Bank Pay service. From a merchant’s perspective, however, there are important differences between the two services. Here’s what you need to know.

What is Pay by Bank App?

At the checkout (real or online), the customer chooses Pay by Bank App. If they are using a computer they will see a pop-up with a six-digit code. They then need to go to their mobile banking app, log in as usual and enter this code.

If they are already on a mobile device, they will be taken straight to their banking app’s login screen. They do not need to enter a code. Either way, the details of the transaction will be displayed to them. Assuming they are happy, they confirm payment and the order is complete.

What is Instant Bank Pay?

At the checkout, the customer clicks on a pay link. This can also be sent to them by other means such as email. This takes them to a checkout page with the details of their order. If they are happy with what they see, they log in to their bank and confirm the payment. They can do this from a regular computer or a mobile device. The order is then complete.

Key differences between PBA and IBP

The main difference between Mastercard’s Pay by Bank App and GoCardless Instant Bank Pay is that Pay by Bank App works on a proprietary network. Instant Bank Pay, by contrast, is powered by Open Banking. This key difference leads to several other practical differences for merchants.


If you want to use Pay by Bank App, you’ll need to partner with an acquirer bank or payment service provider that can process Mastercard transactions. You’ll also only be able to process Pay by Bank App transactions if a payer’s bank also supports Pay by Bank App.

If you want to use Instant Bank Pay, you simply sign up for a GoCardless account. You can use Instant Bank Pay to charge customers of any UK or German bank that supports Open Banking. If you wish to charge a customer of a bank that does not support Open Banking, GoCardless provides an alternative method to do so.


Technically, the costs of Pay by Bank App are set by Mastercard. In practice, however, merchants need an acquirer or payment-scheme processor to access the service. This means that what you actually pay will depend on your deal with them. If you only process a small volume of transactions, you may pay a lot more than Mastercard’s base rate.

With Instant Bank Pay, you connect directly to GoCardless. This means you will always pay the current price shown on the GoCardless website.


Pay by Bank App currently has to be implemented through an online checkout system. It already integrates with the main checkout providers’ systems. If, however, you have a highly customised system or you use a proprietary system, you may have issues with the integration.

Instant Bank Pay is managed through the GoCardless dashboard. This is accessed over the internet in much the same way as any other secure website. You can message your customer from within the dashboard. Alternatively, you can send them a link directly (for example by email). You can also integrate links into your website for any customer to use.

Scheme rules

As Pay by Bank App is run by Mastercard, it operates on rules laid down by Mastercard. By contrast, Instant Bank Pay uses the established Faster Payments system and therefore operates to the rules of that scheme.

One key difference is that Pay by Bank App follows Mastercard’s rules on chargebacks. Instant Bank Pay follows the rules of the Faster Payments service. This only permits chargebacks in very limited circumstances.

We can help

If you’re interested in finding out more about Pay by Bank App and how it compares with Instant Bank Pay, then get in touch with our financial experts. Find out how GoCardless can help you with ad hoc payments or recurring payments.

Over 85,000 businesses use GoCardless to get paid on time. Learn more about how you can improve payment processing at your business today.

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Interested in automating the way you get paid? GoCardless can help

Interested in automating the way you get paid? GoCardless can help

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