US merchants paid a record $198 billion in card fees in 2025. Pay by Bank is how the math changes.

I regularly talk to merchants who are running healthy businesses on cards. Conversion is solid, checkout works. And yet, the same line item comes up in almost every conversation: processing fees sitting at 2.5%, sometimes 3% or higher for premium rewards transactions. Businesses continue absorbing a cost that has grown every year for decades.

Cards are not going anywhere, and they should not. They remain the foundation of commerce for most American businesses. But the question I hear more often now is: “Does every transaction need to go over a card network?” Pay by Bank is one answer. It routes transactions directly from a consumer's bank account to the merchant, over ACH, RTP, or FedNow, sitting alongside cards rather than replacing them.

The rising cost of a single-rail payment strategy

The numbers make the case quickly. US merchants paid a record $198 billion in card processing fees in 2025. Chargebacks add a separate and growing cost on top: global chargeback losses reached $33.79 billion in 2025 and are projected to hit $41.69 billion by 2028, with 61% of disputes stemming from friendly fraud. And every dollar lost to chargebacks costs US merchants $4.61 in total once fees, overhead, and lost inventory are factored in.

False declines are the part of this picture that surprises merchants most when they see the actual numbers. A customer tries to check out, their card is flagged by an issuer's risk model for reasons unrelated to their ability to pay, and the sale is lost. Globally, false declines cost retailers $308 billion per year, more than six times the cost of actual eCommerce fraud. And many of the customers affected by false declines never come back.

Cards deliver convenience, consumer protection, and rewards in a way that has proved genuinely hard to match. Cost alone does not shift what people reach for at the payment stage. What moves behavior is a more complete experience, and that is the standard Pay by Bank needs to meet.

What Pay by Bank adds to the payment experience

The cost case for Pay by Bank is well documented. The Federal Reserve's July 2025 research note cited fee savings of up to 40% versus credit cards and as high as 85% for some merchant categories. Walmart's 2025 launch of Pay by Bank followed the same reasoning, adding a lower-cost rail to its checkout without touching its card acceptance.

The fraud and chargeback picture also shifts with Pay by Bank. ACH, RTP, and FedNow each play a distinct role: ACH supports both pay-in and pay-out flows, while RTP and FedNow are primarily used for disbursements and pay-outs today. The evolving Request for Payment (RfP) functionality is what brings real-time rails into the acquiring flow — enabling merchants to initiate payment requests directly and creating the foundation for irrevocable, chargeback-free transactions. Authentication goes through the consumer's banking app, so no card data is exposed and expired-credential declines do not apply.  

The markets I watch most closely are the ones where infrastructure and consumer habits come together at the same time. Brazil's Pix now processes more transactions than cards. India's UPI became the default for both peer-to-peer and merchant payments. In the Netherlands, iDEAL dominates eCommerce. In Europe, A2A payments already account for almost 1/5 of all online transactions. In most of those markets, cards and bank-direct options coexist. The broader mix benefits everyone.

Authorization rates and the revenue that’s left on the table

There is a version of the false decline story that plays out thousands of times a day without appearing in any report. A customer reaches to pay. Their card is declined with no explanation given. Some try another card. Many do not. Merchants can see abandoned sessions in their analytics; what they often cannot see is how many of those abandonments started with a card decline the customer never reported.  

Offering Pay by Bank as an alternative option, either proactively or as a recovery path at the moment of a card decline, captures some of those transactions. Bank-authenticated payments bypass the issuer risk models that produce false declines. The MRC's 2026 Global eCommerce Payments and Fraud Report, found that 43% now accept real-time payments, one of the fastest-growing methods globally.

As purchasing moves toward automated execution through agentic AI-driven commerce, predictability, settlement speed, and transaction cost matter more than payment brand. That is where bank-direct rails have a structural advantage, particularly in high-frequency and B2B environments where those variables directly affect margins.

Gen Z is already using Pay by Bank

Pay by Bank accounts for around 1.5% of US consumer transactions today, but the figures among younger shoppers run higher. Federal Reserve consumer research shows 72% of Gen Z and 66% of Millennials are open to using Open Banking payments. Gen Z already transacts via Pay by Bank at 2.5%, nearly double the national average. These are consumers who grew up with mobile banking as their primary financial tool, who trust their banking app, and who feel less tied to card rewards than their parents.

Our research at Nuvei adds context. ACH already processes ten times the volume of card networks in the US. The infrastructure for bank-direct payments is operating at scale. Within that, 18% of US consumers already use online bank transfers for recurring bills, making it the third most common payment method after debit and credit cards. And 46% say they prefer cash rewards for using Pay by Bank, which gives merchants a straightforward incentive model: redirect a share of the interchange savings back to the customer. Uber did this with discounts off future rides, and Airbnb has started offering Pay by Bank for select transactions.(we need to rethink this as ACH is 10X the volume of card networks in U.S.)

Security perception remains the main friction. Around 34% of consumers who have tried Pay by Bank still cite concerns, though that figure falls as bank-level authentication becomes more familiar. Clear, plain-language messaging at payment moves the needle faster than most merchants expect.

Where to start

The merchants moving fastest on Pay by Bank are not treating it as a card replacement. They start with adding the Pay by Bank tender as an option within a digital wallet type relationship which enables seamless recurring payins and payouts, purchase of digital goods, B2B payments, and higher-value purchases where interchange savings are most material. That is where the business case is clearest and consumer resistance is lowest.

Infrastructure is keeping pace. FedNow's transaction limit expanded to $10 million in late 2025. The Clearing House's RTP network keeps growing. The next phase of growth will be driven less by regulation and more by the ecosystem getting better at aligning incentives, banks, merchants, and payment providers working together to make Pay by Bank the obvious choice at the right moments.

What I see working is straightforward. Lead with a checkout experience that does not ask consumers to do extra work, pair it with a visible reward for choosing Pay by Bank, and communicate clearly about how bank authentication protects them.  

The bottom line

Global eCommerce fraud losses reached $48 billion in 2025, and are on track to reach $107 billion by 2029. Card fees will keep growing, and chargeback costs will follow. The merchants best placed to absorb these pressures are those with a payment mix that recovers declined sales, reduces fraud exposure across multiple rails, and gives consumers a reason to choose the lower-cost option.

Pay by Bank, on ACH, RTP, and FedNow through Nuvei's multi-ODFI network, is a practical way to build that mix without rebuilding what already works. For merchants, ISVs, and platforms ready to take that step, connect with our team.

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