What's The Difference Between Ways To Pay Such As Pay by Bank, Credit Cards, and Debit cards

16th March 2026

When paying for goods online, Pay by Bank, credit cards, and debit cards all move money differently and have different protections and fees. Here's a comparison as Pay by Bank save the online retailers fees but may not be best for the consumer.

Pay by Bank (Open Banking payment)

How it works:
You log in to your bank through a secure link and approve a direct bank transfer to the retailer using Open Banking technology.

Money comes directly from your bank account
No card details are used
Payment is usually instant

Pros

Very secure (you authenticate through your bank)
No card numbers shared with the retailer
Often cheaper for merchants

Cons

Usually no chargeback protection
Refunds depend on the merchant
Not supported by every bank or website

Example providers:
TrueLayer
Trustly
GoCardless

Best for: trusted merchants, bill payments, or when you want to avoid using cards.

Debit card

How it works:
The payment is taken directly from your current account, but processed through a card network.

Typical networks:

Visa
Mastercard

Pros

Widely accepted
Some fraud protection
Money comes straight from your bank

Cons

Weaker consumer protection than credit cards
If something goes wrong, refunds can take time

Best for: everyday purchases where you want to avoid borrowing.

Credit card

How it works:
You borrow money from the card provider and repay it later.

Major networks include:

Visa
Mastercard
American Express

Pros
Strongest consumer protection

In the UK, purchases between £100 and £30,000 are protected by Section 75 of the Consumer Credit Act

Easy chargebacks if goods don't arrive

Often rewards or cashback

Cons
Interest if not paid off
Easier to overspend

Best for: expensive items or when you want maximum protection.

Simple rule many people use:

Large purchases: credit card (for protection)
Normal purchases: debit card
Trusted retailer or bills: Pay by Bank