The government has just told millions of citizens they will soon be able to pay for public services straight from their bank account. On 2 June 2026 the Government Digital Service confirmed it is moving Gov.UK Pay, the platform behind roughly 1,000 public services, from Stripe to Adyen, with open banking Pay by Bank a central part of the plan. For UK merchants the procurement detail matters less than the signal it sends: account-to-account payment is moving from fintech pilot to mainstream checkout, and it is worth understanding what that means for your costs and your payment mix.

What the government actually announced

The Government Digital Service (GDS) has appointed Adyen as the payment services provider for non-Crown card payments and Pay by Bank across Gov.UK Pay, under a three-year contract reported to be worth up to £25.3 million, according to The Register. The switch, set out on the GDS blog, affects around 1,000 services used by local councils, police forces and central agencies, and it will roll out in phases rather than overnight. Card payments migrate first; Pay by Bank, which lets a citizen approve a payment inside their own banking app over open banking rails, follows as the platform beds in. GDS has framed the goal plainly: lower processing costs, less card fraud liability, and a simpler experience for the public.

Why a government payments contract matters to private merchants

It is fair to ask why a public-sector procurement should change how a coffee shop or an online retailer thinks about payments. The answer is demand. Account-to-account payments have existed in the UK for years through open banking, but adoption at the checkout has been held back by unfamiliarity, because shoppers reach for the card or wallet they already trust. When a service as large and everyday as Gov.UK Pay starts offering Pay by Bank to millions of citizens, it normalises the "approve in your banking app" journey at scale. Every person who pays their council tax or a court fee that way becomes a little more comfortable doing the same at a private checkout. That is how a niche rail becomes a default option, and it is why this is worth watching even if you never sell to the public sector.

The cost and settlement angle

The appeal of Pay by Bank for any merchant is the same one the government is chasing. A bank-rail payment sidesteps card interchange and scheme fees, and it settles quickly over Faster Payments. The picture is more nuanced than "cheaper than cards", though, and the honest planning assumptions look like this:

  • Lower acceptance cost, in the right places: with no interchange in the traditional sense, Pay by Bank can undercut card-not-present rates, and the saving is largest on higher-value transactions where a percentage-based card fee bites hardest.
  • Fast settlement: payments can clear in seconds rather than the next working day, which helps cash flow, although the exact timing depends on your provider's setup.
  • No chargebacks, but weaker dispute rights: account-to-account removes card chargeback risk for the merchant, yet it also removes the chargeback protection your customers are used to, so it suits some baskets far better than others.
  • Pricing is still settling: open banking commercial models are being finalised, so the assumption that account-to-account will always dramatically undercut cards deserves a question mark until premium-access pricing rules are fixed.

What this means for your payment mix

There is nothing to act on urgently. Cards remain the default for UK consumers and will for years yet, and the surest saving available today is making sure your existing card processing is genuinely competitive before you bolt on a new rail. The sensible posture is a multi-rail one: keep card acceptance on fair, transparent terms, then add account-to-account options as they mature rather than instead of what already works. Monek is an FCA-regulated UK payment gateway (FRN 920628) built for exactly that mix, with card processing from 0.99% blended, IC++ from 0.49% for higher-volume businesses, next-day settlement, a free WooCommerce payment gateway plugin, native Xero integration, plus Virtual Terminal and Pay by Link for phone and remote orders. As Pay by Bank moves into the mainstream, our aim is to let merchants switch it on alongside cards through the same portal and the same support team. If you want an honest read on what you pay today, and where account-to-account might help before you change anything, our team will run a no-obligation rate comparison and talk it through in plain English.