Financial experts have issued a stark warning to online shoppers regarding a specific payment method gaining traction on major platforms such as Amazon and eBay. The Money Saving Expert (MSE) team has highlighted that this emerging option, known as "pay by bank," could significantly reduce consumer protections, leaving individuals vulnerable if transactions go awry.
What Is 'Pay by Bank' and Why Is It Risky?
In a detailed video uploaded to the MSE website, an expert from the team explained that "pay by bank" functions as an instant bank transfer, bypassing traditional card networks like Visa or Mastercard. While it may appear as a quicker and more straightforward checkout option, it carries inherent risks. The expert emphasised, "Don't use this new pay by bank option on Amazon, eBay, or elsewhere until you've watched this video."
This payment method involves selecting your bank from a list during checkout, being redirected to your bank's app or online banking to log in using biometrics or a PIN, and then authorising a pre-filled payment. However, the convenience comes at a cost: users lose critical safeguards such as Section 75 on credit cards and chargeback rights on both credit and debit cards.
Key Protections at Stake
These protections are essential for consumers, providing an extra layer of security when retailers fail to resolve issues. Section 75 offers legal recourse for credit card purchases over £100, while chargeback allows disputes on debit and credit card transactions. The MSE expert noted, "Both of these give you an extra way to try getting your money back if something goes wrong and the retailer is not playing ball."
Given these risks, the MSE team advises that it is "safest" to continue paying by card, especially for larger or important purchases. They recommend, "So if you've got a big important purchase, it's safest to stick with cards."
Growing Popularity Despite Warnings
Despite the cautions, millions of consumers are already using "pay by bank." According to recent figures from the Open Banking industry body, there were over 30 million successful transactions in the UK in January 2026 alone. This surge in usage underscores the need for heightened awareness about the potential downsides.
MSE founder Martin Lewis had previously raised alarms about this payment method. In a post on X in 2025, he stated, "Warning: Have you started to notice 'Pay by Bank app' options at online checkouts? If so, it's quicker, it's easier, but be aware there's little protection." He highlighted its presence on platforms like Just Eat and Ryanair, noting that while it simplifies payments by eliminating card details, it essentially functions as a bank transfer with limited refund rights.
Practical Advice for Shoppers
To mitigate risks, consumers should consider the following:
- Use cards for significant purchases to retain Section 75 and chargeback protections.
- Reserve 'pay by bank' for small, low-risk transactions where potential losses are minimal.
- Stay informed by checking resources like the MSE website for updates on consumer rights.
As online shopping continues to evolve, understanding payment options is crucial. The MSE warning serves as a timely reminder to prioritise security over convenience, ensuring that consumers do not inadvertently forfeit their rights in the pursuit of faster checkouts.
