Introducing Pay by Bank for UK Small businesses: More payment options, healthier cash flow

Late payments pose a significant hurdle for small businesses, frequently disrupting cash flow and complicating the management of daily operations. Recognising this challenge, we’re dedicated to helping you receive payments more efficiently by expanding your payment options.

Building on our existing support for credit cards, debit cards, Apple Pay, and Google Pay, we’re excited to announce the addition of Pay by Bank. Powered by Stripe, this new feature empowers your customers to make payments instantly from their bank accounts straight from their online invoice. By offering your customers a wider range of payment methods, you increase the likelihood of getting paid faster and spending less time chasing payments. Introducing these additional payment alternatives ensures your customers have every convenient opportunity to pay invoices quickly, making it a swift, secure, and cost-effective solution for everyone involved.

What is Pay by Bank?

Pay by Bank is a real-time payment method in the UK that enables you to collect one-time payments from your customers’ bank accounts quickly and securely, and at an affordable cost.  Consider it a modern alternative to traditional direct debits. This integrated digital payment solution allows customers to authorise and approve payments through their mobile banking app or online banking portal. Payment confirmations are immediate within your Stripe account, so you know the money is en route and can confidently manage your cash flow. Once a customer authorises a payment, the corresponding invoice is automatically marked as paid, simplifying bank reconciliation.    

We understand that chasing overdue payments consumes valuable time that could be better spent managing and growing your business. That’s why we’re investing in innovative solutions like Pay by Bank, alongside other payment methods, to help you receive timely payments with minimal effort. By offering your customers more convenient choices, we aim to accelerate invoice settlement, ultimately freeing you from unnecessary cash flow concerns.

Benefits of using Pay by Bank

Here are several advantages of using Pay by Bank for your small business:

• Quick and convenient for customers: Pay by Bank allows customers to authorise bank payments instantly and securely using their mobile banking app or online banking portal.  They simply select their bank, log in, and approve the payment.    
• Real-time payment visibility: When your customer makes a payment, the confirmation is visible in your Stripe account instantly, giving you assurance that your funds are on their way.  Typically, Stripe will settle these funds within two business days.    
• Affordable transaction fees: Pay by Bank facilitates fast and secure transactions with affordable  and, importantly, capped fees, so more money stays in your business.
• Automated processes: When your customer pays, the invoice is automatically marked as paid for both you and them.  Payment confirmations are instant in your Stripe account, and funds are settled automatically, making reconciliation a breeze.

How to use Pay by Bank in Xero

Pay by Bank is available with a Stripe account.  To activate it:   

• Go to your Dashboard, select Business, then Online Payments
• In the Manage payment methods tab, click “Turn On” next to Pay by Bank
• This will enable the feature for all future invoices and any unpaid invoices you’ve already sent

You have the option to enable or disable this setting as needed directly from your invoice.    

When your customer chooses to pay with Pay by Bank, they will follow these steps:

• On the online invoice, the customer selects Pay by Bank as their chosen payment method    
• The customer then selects their bank. It’s important to note that the customer must have a UK bank account with a supported bank to use Pay by Bank. To learn more about eligible banks, click here (Note: payments from non-UK bank accounts, even if the bank is listed, are not supported)
• The customer is then directed to their bank’s mobile app or online banking portal to authorise the payment
• Once the payment is authorised, the online invoice will be automatically marked as paid

Pay by Bank enhances Xero’s payment capabilities, providing your customers with more ways to pay, which helps you receive payments promptly and consistently.

Learn more about offering Pay by Bank here.