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Your Pay by Bank questions answered

Find out more about Pay by Bank, how it works, and frequently asked questions.

What is Pay by Bank?

Pay by Bank, a real-time payment method integrated with Stripe, allows you to collect fast and secure one-off payments from your customers bank account at an affordable cost. Payments are confirmed in your Stripe account instantly, so you know the money is on its way.

What are the benefits of Pay by Bank?

• Fast and easy for your customer - Pay by Bank enables customers to authorise bank payments 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 pays, payments are confirmed in your Stripe account instantly, giving you peace of mind. Stripe typically settles your funds within 2 business days.
• Low processing fees - Pay by Bank offers fast, secure transactions at an affordable cost, so more money stays in your business.
• End-to-end automation: When your customer pays, the invoice is automatically marked as paid for you and them. Payments are confirmed in your Stripe account instantly, and funds are settled so you don't have to lift a finger.

How does Pay by Bank work in Xero?

Turning on Pay by Bank (As the merchant)

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

• From your Dashboard, click Business, then Online Payments
• In the Manage payment methods tab, click “Turn On” next to Pay by Bank
• It is now enabled for all future invoices and any invoices you have already issued but have not yet been paid. You can choose to toggle this on or off as needed right from your invoice.

Using Pay by Bank to pay an invoice (As the payer)

• From the online invoice, the customer chooses Pay by Bank as their payment method
• The customer chooses their bank.
• The customer is then redirected to their bank’s mobile app or their bank login to approve the payment.
• Once the payment is authorised, the online invoice will be marked as paid.

What is required for me to enable Pay by Bank?

You need to have a Stripe account connected in Xero.

What banks are supported with Pay by Bank?

Below is a list of banks supported in the UK. Note that your customer must have a UK bank account with these banks. A non-UK bank account with a bank listed here will not work. Supported banks cover 98% of the UK consumer market:

• Barclays
• Bank of Scotland
• Danske Bank
• First Direct
• Halifax
• HSBC
• Lloyds
• Natwest
• Nationwide
• Santander
• Royal Bank of Scotland
• TSB
• Ulster Bank
• Monzo
• Revolut

Can I set up recurring payments with Pay by Bank?

Right now, Pay by Bank, powered by Stripe is just for those one-time payments. Recurring payments aren’t supported just yet.

How much does Pay by Bank cost?

See the Xero pricing page for more information

Why are there fees? I hear some banks do not charge a fee to use it directly via the bank.

It is up to each bank or financial institution on whether or not they charge merchants fees to use Pay by Bank. Stripe is currently offering Pay by Bank, integrated with Xero. Like any payment processing service, there are costs to build the integration and facilitate the transaction, including data security and network fees.

The low transaction fees make it an ideal choice for larger transactions. Plus, there’s no ongoing subscription costs to use Pay by Bank - you are only charged for a transaction fee when a customer makes a payment .

You’ll also have the added benefit of managing all your payment methods directly within Xero, and offering your customers more ways to pay.

I am not using Stripe, but I am using GoCardless - can I set up Pay by Bank as a payment method in Xero?

No, at this stage Pay by Bank is only available to Xero customers using Stripe.

When will I receive my payout?

When your customer successfully pays with Pay by Bank, you’ll see the confirmed payment in your Stripe account. Stripe typically settles your funds within two business days.

My customer is having trouble finding the Pay by Bank option as their payment method, what should I advise them?

First, double check that Pay by Bank is enabled in the Manage Payment Methods tab. If it is, ask your customer to confirm they’re using a UK bank account that supports Pay by Bank. If they’re still stuck, it might be best for them to contact their bank for specific guidance.

What if my customer didn’t receive their Pay by Bank payment authorisation request when logging in to their bank?

If your customer has chosen to pay via Pay by Bank but have not seen the request by logging into their bank, we suggest your customer contacts their bank for assistance.

What happens if my customer declines the Pay by Bank payment?

The invoice will remain open (unpaid) and the customer will have to select a different method to pay.

My customer is receiving an error from their financial institution and they can’t authorise the payment with Pay by Bank - is this an error with Xero or Stripe?

If your customer experiences an error, there are several factors to consider such as the accuracy of payment details and sufficient funds, however we suggest your customer contacts their bank for assistance.

How do refunds work with Pay by Bank?

Refunds for Pay by Bank are processed through the Stripe dashboard. See Stripe’s user documentation to get up to date information on how to issue a refund.

How do disputes work with Pay by Bank?

At this time, Pay by Bank does not support disputes. This must be resolved between you and your customer or the bank the payment is being processed with.

Are there transaction limits?

There is a payment amount limit of £25,000, which is in line with the limits that most banks set.

Are there any restrictions to enable Pay by Bank for certain businesses or Merchant Category Codes (MCC)?

Please refer to Stripe’s published list of prohibited and restricted businesses.