Pay by Bank Chargebacks: Does It End Disputes? (UK)

"Switch on Pay by Bank and your chargebacks disappear." It is a neat pitch, and half of it is true. The bank can no longer reverse the payment for you. The customer who is unhappy has not gone anywhere.

Pay by Bank chargebacks do not exist in the card sense, because open banking payments have no built-in chargeback route. That removes one kind of dispute and leaves the others: refund requests, consumer rights, complaints and fraud questions. This guide explains what Pay by Bank changes for a UK Shopify store, what it does not, what to put in your policies and how to run the sums, with templates, worked examples and a day-by-day plan.

Last updated: 9 October 2026. Written by the ChargeFix team.

The 30-second answer (TL;DR)

Pay by Bank chargebacks are not a thing in the card scheme sense. Open banking payments have no built-in chargeback, and Stripe's documentation says it offers no dispute support for them, according to the material we reviewed.
That does not end disputes. Buyers still ask for refunds, still have consumer rights and can still complain. You lose a safety valve, and so do they.
UK consumer rules apply whatever the payment method: for most distance sales, a 14-day cancellation right and a refund within 14 days of getting the goods back or evidence of return.
Stripe's documentation says refunds on Pay by Bank can be made for up to 730 days, according to the material we reviewed, so your refund exposure is long.
Section 75 covers credit card purchases only, according to MoneyHelper, so it does not apply to a bank payment.
Because the buyer has no chargeback, clear delivery and refund policies matter more, not less. A buyer who cannot reverse a payment is more likely to hesitate before paying.
General information, not legal or financial advice. We did not review whether Pay by Bank is available on your Shopify store, its fees, or how banks handle unauthorised payment claims, and the post says so where it matters.

From dispute to decision

Question	Card payment	Pay by Bank	What it means for you
Can the buyer ask their bank for a chargeback?	Yes, usually within 120 days	No built-in chargeback	No chargeback fee and no chargeback response form
Does Section 75 apply?	Credit cards, £100 to £30,000	No, credit cards only	Different protection for the buyer
Do consumer rights apply?	Yes	Yes	Refund and cancellation rules still bind you
Who decides if the buyer is unhappy?	The card company	You, then other routes	Your refund process is the dispute process
How long can you refund?	Depends on the card	Up to 730 days per Stripe's documentation	Long exposure
Evidence still needed?	For the response form	For complaints and refund decisions	Keep records anyway

What are Pay by Bank chargebacks, and do open banking payments have them?

Pay by Bank chargebacks, in the card sense, do not exist. Pay by Bank is an open banking payment: the buyer authorises a transfer from their bank account to yours. There is no card scheme, so there is no built-in chargeback route. Buyers who are unhappy have to come to you or use other complaint routes.

A little background on Pay by Bank chargebacks helps. A card chargeback is a voluntary arrangement among card schemes, banks and card issuers, according to MoneyHelper, usually claimed within 120 days. It is not a legal right. It exists because the card schemes built it. An open banking payment is a different product. It moves money from the buyer's bank to yours using a bank's API, without the card scheme in the middle. The chargeback mechanism sits with the scheme, so it does not apply.

What we can say from the material we reviewed:

Open banking payments have no built-in chargeback.
Stripe's documentation says there is no dispute support for Pay by Bank.
Refunds are possible for a long period, up to 730 days according to Stripe.

What we did not review: how a UK bank treats a claim that an open banking payment was unauthorised, what fraud protection or reimbursement a buyer might have, and how those claims reach a merchant. Those questions matter, and we do not want to guess. Ask your payment provider and your bank.

We also did not verify whether Pay by Bank is available on your Shopify store, which providers offer it or what it costs. Check Shopify's payment settings and your provider's terms before you plan around it.

For the card side of how disputes work, read our Shopify chargebacks UK guide. Shopify's help centre explains that Shopify is not liable for chargebacks and that you respond with evidence. That process does not apply to a Pay by Bank order, because there is no chargeback to respond to.

Do Pay by Bank chargebacks end disputes?

No. Pay by Bank removes the card chargeback, not the reasons buyers get unhappy, so Pay by Bank disputes still arrive. Late delivery, damaged goods, wrong items and refund delays still happen. The dispute simply arrives as an email, a complaint or a refund request instead of a bank notice.

Think of the dispute lifecycle on a card order and on a bank order:

Stage	Card order	Pay by Bank order
Buyer unhappy	Contacts you or their bank	Contacts you, or complains elsewhere
Escalation	Bank raises a chargeback	No chargeback; the buyer relies on your refund or on other complaint routes
Merchant response	Evidence on the response form	Your own refund decision
Decision	Card company	You, subject to consumer law
Money moves	Bank debits you	You refund, or you do not

That last row is the one that changes the economics. On a card order, a lost chargeback takes your money whether or not you agree. On a Pay by Bank order, you decide whether to refund, and the consequences of saying no are different: a complaint, a small claims case, trading standards, a bad review.

Which routes might a Pay by Bank buyer use? We did not review the full list, and it depends on the facts. Plausible routes include a complaint to you, a complaint to the bank, a complaint to a trade body or consumer organisation, trading standards and a small claims case. None is as quick as a chargeback, and none costs you a £10 fee, but each can cost time.

This is why some merchants find that Pay by Bank chargebacks missing from the picture trade predictable card disputes for less predictable ones. The disputes shrink in number, since friction rises for the buyer, and each one is harder to dismiss as "just a chargeback".

What consumer rights apply when Pay by Bank disputes become refund requests?

The same as for any distance sale. Most UK consumers have a 14-day cancellation right after receiving the goods, you must refund within 14 days of getting the goods back or evidence of return, and faulty goods rights apply. Payment method does not change consumer law.

This section is general information, not legal advice. It draws on the legislation.gov.uk explanatory notes and the Consumer Rights Act 2015 section we reviewed. Ask a qualified adviser to check your own wording.

Point	Plain-words summary	What to do for Pay by Bank orders
Cancellation	Most distance buyers have 14 days after receiving the goods	State the 14 days in your terms
Refund timing	Within 14 days of getting the goods back or evidence of return	Refund by bank transfer back to the paying account
Return costs	Buyer pays only if told before buying	Say who pays before checkout
Faulty goods	Consumer Rights Act 2015 remedies apply	Respond to faulty goods claims promptly
Risk in transit	Goods stay at your risk until delivered	Offer trace, reship or refund

A Pay by Bank order does not give you extra time or a way to avoid refunds. If anything, it makes your refund process the only dispute process, so it has to be quick, polite and documented.

Our terms and conditions template includes returns and refund wording, and our shipping and delivery policy template covers lost and late parcels. Adapt both for bank-paying customers, and check the payment method wording.

How do you handle Pay by Bank disputes within the 730 days?

You refund through your payment provider, back to the account that paid, and you email the buyer a confirmation with the date and reference. Stripe's documentation says refunds can be made for up to 730 days. Tell the buyer how long the money may take.

Refund exposure on Pay by Bank disputes lasts longer than most merchants expect. A 730-day refund window means that an order you shipped in October 2026 can still be refunded in October 2028 if you choose or are required to. Your records should last at least that long, and your accounts should expect refunds long after the sale.

Use this checklist for refunds on Pay by Bank disputes:

Confirm the order was paid by bank and find the payment reference
Check the return or refund request against your policy and the 14-day rule
Issue the refund through your provider, back to the paying account
Send a refund confirmation the same day, with amount, date and reference
Tell the buyer when to expect the money, and say it depends on their bank
Record the refund in your log and accounts
Keep the record for at least 730 days

A refund confirmation email matters even more here. Without a chargeback process, the buyer's only record of what happened is what you send. Use this wording:

Subject: Your refund for order [ORDER NUMBER] has been issued

Hi [FIRST NAME],

We have issued a refund of £[AMOUNT] to the bank account you paid from, today, [DATE].

Refund reference: [REFERENCE]

It usually arrives within [NUMBER] working days, depending on your bank. If you cannot see it by [DATE], reply to this email and we will trace it with our payment provider.

[YOUR NAME]
[STORE NAME]

We did not verify typical refund timings for Pay by Bank, so avoid promising an exact day. Say "usually within a few working days, depending on your bank" and give the date you issued it.

For the accounting side, record the refund as you would any other, and see chargeback accounting and VAT in the UK for how to keep a log of reversals, even where no chargeback exists.

What are the risks when Pay by Bank chargebacks do not exist?

The main risks are a long refund window, a buyer who feels they have fewer protections and the unknowns around unauthorised payment claims. You also lose the card chargeback's separation of roles: you cannot hand a decision to a card company, so every call is yours.

Here is a plain risk list for Pay by Bank chargebacks and disputes:

Risk	What it looks like	What to do
Long refund exposure	Refunds possible for up to 730 days per Stripe	Keep records and expect late requests
Buyer hesitation	Buyers avoid paying by bank because they cannot reverse it	Make your policies visible and your returns easy
Unclear fraud route	Not covered in the sources we reviewed	Ask your provider how unauthorised payment claims work
Heavy reliance on goodwill	No third-party arbiter	Reply fast, document every decision
Complaint routes	Complaints to banks, trade bodies, trading standards	Keep order, delivery and refund evidence
Weaker fraud signals	Fewer card network checks	Check unusual orders manually

On fraud, we did not review how banks and providers treat a claim that a bank payment was unauthorised. Shopify's help centre says successful 3D Secure shifts liability for fraudulent chargebacks only, which is a card concept. It does not describe bank payments. So we cannot say who bears the loss if a bank payment is later claimed as unauthorised. Ask your provider in writing before you rely on Pay by Bank for high-value orders.

What is the value of having no Pay by Bank chargebacks? Two worked examples

Offer it if the savings from having no Pay by Bank chargebacks, plus any lower fees, exceed the cost of lost sales and extra refund risk. Run the sums with your own numbers. The first example shows the dispute savings. The second shows how much conversion you can afford to lose.

Both examples are illustrations with invented numbers. The arithmetic is checked. We did not verify Pay by Bank fees, so these examples ignore any difference in processing fees. We assume Shopify's UK fee for card chargebacks is £10, charged by the bank and returned if you win.

Example 1: Pay by Bank chargebacks versus card chargebacks. A store takes 2,000 orders a year at £75.00. On card, 1% are disputed, which is 20 disputes. It loses 60% of them, which is 12. Each lost card dispute costs the order and the fee. On a Pay by Bank basis, we assume the same 20 buyers complain, and the store refunds the 8 justified ones and declines the other 12.

Case	Calculation	Cost
Card: 12 lost disputes	12 × (£75.00 + £10.00)	£1,020.00
Pay by Bank: 8 refunds	8 × £75.00	£600.00
Difference	£1,020.00 − £600.00	£420.00

On these invented numbers, bank payments save £420.00 a year. Two warnings. First, the 12 declined buyers have not gone away, and some may complain elsewhere, costing time. Second, the example ignores lost sales, which the next sum covers.

Example 2: how much conversion can you afford to lose? Take sales of 2,000 × £75.00 = £150,000.00 and a gross margin of 30%, an invented figure. The dispute saving is £420.00. The break-even is £420.00 ÷ 30% = £1,400.00 of lost sales, which is £1,400.00 ÷ £150,000.00 = 0.93% of sales.

Item	Calculation	Amount
Annual sales	2,000 × £75.00	£150,000.00
Dispute saving	From example 1	£420.00
Margin	30%	Invented
Sales you can lose before the switch costs money	£420.00 ÷ 0.30	£1,400.00
As a share of sales	£1,400.00 ÷ £150,000.00	0.93%

If offering Pay by Bank costs you more than about 0.93% of sales, for example because some buyers abandon checkout when they cannot use a card with its protections, the dispute saving does not cover it, ignoring processing fee differences. If it brings in sales you would not otherwise get, the sum improves. These numbers are assumptions, and nothing here predicts an outcome.

Situation	Suggested move	Reason
Low dispute rate, strong policies	Offer as an option, not the default	Little to save
High card dispute rate, mostly fraud	Ask your provider about bank fraud routes first	The fraud answer is not in the sources we reviewed
High-value orders	Keep cards available and think carefully	Buyers want protection on large spends
Repeat customers	Offer it	Trust is higher

What should your policies say when there are no Pay by Bank chargebacks?

Say what the buyer can expect: how to return, when you refund, how you refund and how to reach you. A buyer with no chargeback needs more reassurance, not less. Show the policy beside the payment option and keep a dated copy.

Add four short lines to your terms and checkout copy:

"If you pay by bank, any refund goes back to the account you paid from."
"We refund within 14 days of receiving your return or proof that you have sent it."
"You can contact us at [EMAIL]. We reply within [NUMBER] working days."
"Your statutory rights are not affected."

Then test the pages for Pay by Bank disputes with someone who has never seen your store. Ask them: if something went wrong, what would you do? If they cannot answer, your buyers cannot either.

Use this checklist when you add Pay by Bank:

Delivery and returns pages are live, dated and linked at checkout
The refund route for bank payments is described in plain words
Your confirmation and refund emails include contact details and reply time
You know who in the team handles bank-paid refund requests
You have asked your provider in writing about unauthorised payment claims
Your records for bank orders will be kept for at least 730 days
You review bank-paid orders monthly for patterns

Day-by-day plan: handle Pay by Bank disputes and adopt the option safely

You can test Pay by Bank in a month without betting the store on it. The plan below checks availability, rules, policies and numbers before you switch anything on for all customers.

Day	Task	Output
Day 1	Check whether Pay by Bank is available on your store and provider	A yes or no
Day 2	Ask your provider in writing about fees, refunds, unauthorised payment claims and records	Written answers
Day 3	Export 12 months of card disputes by reason and value	A data file
Day 4	Run the two sums in this post with your numbers	A break-even
Day 5	Update your terms and refund wording for bank payments	Draft policy text
Day 6	Write the refund confirmation email and the refund process	Template and checklist
Day 7	Decide whether to trial and on which products	A trial plan
Days 8 to 28	Run the trial, log every bank-paid refund request	A month of data
Day 29	Compare dispute count, refund count, conversion and time	A comparison table
Day 30	Keep, change or stop	A dated decision

Our chargeback SOP for small teams gives the routine to run alongside this plan. Keep one log for cards and banks so you can compare like with like.

How do Pay by Bank chargebacks compare with other payment methods?

Pay by Bank has no chargeback. Card payments have one. PayPal has its own dispute and claim route. Klarna and Clearpay have theirs. The trade-offs differ by method, so decide which methods suit your store and which disputes you want to handle.

Method	Dispute route	Buyer protection source	Where to read more
Pay by Bank	No built-in chargeback	Consumer law and complaint routes	This post
Cards	Chargeback, usually within 120 days	Card scheme rules; Section 75 on credit cards	Shopify chargebacks UK
PayPal	Dispute, claim and chargeback	PayPal's process	PayPal dispute vs chargeback
Klarna	Klarna's dispute flow	Klarna's process	Klarna disputes on Shopify UK
Clearpay	Clearpay's dispute flow	Clearpay's process	Clearpay disputes for merchants

A mixed checkout is common. If you offer several methods, your dispute log should include a payment method column, so you can see which route produces which dispute. A store that discovers that 70% of its disputes come from one method has a clear place to start.

Why do people expect Pay by Bank chargebacks to exist?

People expect Pay by Bank chargebacks because they are used to cards. A card statement shows a "dispute" button, and the idea of getting money back through the bank is familiar. A bank-to-bank payment feels like a card payment from the buyer's side, so the same expectation follows.

It helps to name the gap clearly, for your team and for your customers. When a buyer asks "can my bank reverse this?" about a Pay by Bank order, the honest answer from the material we reviewed is that open banking payments have no built-in chargeback. That is not a defect in your shop. It is how the payment type works.

Three habits keep the conversation calm:

Do not promise Pay by Bank chargebacks exist. Do not promise that they do not matter either.
Point the buyer to your refund and returns steps, not to their bank.
Make your own process quick enough that the buyer never needs another route.

Pay by Bank chargebacks versus card chargebacks and Section 75: how do they compare?

Card chargebacks come with a fee, a response form, a deadline and a card company decision. Pay by Bank chargebacks do not exist, so none of that applies, and the decision returns to you. The cost moves from a fee and a lost sale to your own refund decisions and your time.

Feature	Card chargeback	Pay by Bank disputes
Built-in reversal	Yes, usually within 120 days	No built-in chargeback
Fee	£10 in the UK for cards on Shopify, returned if you win	Not covered in the sources we reviewed
Response form	Yes, 7 to 21 days on Shopify	None
Who decides	The card company	You, then other complaint routes
Evidence needed	For the form	For refund decisions and any complaint
Counts in a chargeback rate	Yes, even if you win	Not a card chargeback
Refund window	Depends on the card	Up to 730 days, per Stripe
Section 75	Credit cards, £100 to £30,000	No, credit cards only

The row about evidence is the one merchants forget. Without a form, you might think you need no evidence. In practice you need the same facts, because a complaint, a trading standards enquiry or a small claims case will ask for them. Keep the order, delivery and refund record for every Pay by Bank order for at least as long as you keep card orders.

What should you tell customers who ask about Pay by Bank chargebacks?

Tell them plainly what happens if something goes wrong: contact you, you reply within a stated time, you refund under your policy and their consumer rights are unchanged. Do not describe a protection that does not exist, and do not scare them off a payment method you offer.

Customers ask short questions. Have a short answer ready:

Hi [FIRST NAME],

Thanks for asking. If you pay by bank, there is no card chargeback, but your rights as a customer are the same. If anything goes wrong with your order, email [EMAIL] and we will reply within [NUMBER] working days. You can return most items within 14 days of receiving them and we refund within 14 days of getting them back, to the account you paid from.

If you would rather pay by card, you can choose that at checkout.

[YOUR NAME]
[STORE NAME]

That last line matters. A buyer who feels uneasy about Pay by Bank chargebacks not existing should be free to use a card. Forcing the choice costs you the sale and gains you nothing.

Quick rules for Pay by Bank chargebacks and disputes

Keep these near your desk. They sum up how to handle Pay by Bank chargebacks questions and the disputes that still arrive.

Pay by Bank chargebacks do not exist in the card sense, so do not plan a response form that never comes.
Consumer law still applies. Refund within 14 days of getting the goods back or evidence of return.
Keep records for 730 days, because refunds are possible that long.
Ask your provider in writing how unauthorised payment claims work, because the sources we reviewed do not say.
Offer cards alongside bank payments, so nervous buyers have a choice.
Log every complaint and refund on bank orders, and compare them with your card disputes each month.

What's different for UK merchants

This section is general information, not legal or financial advice.

Chargeback and Pay by Bank chargebacks: MoneyHelper describes chargeback as a voluntary card-scheme arrangement, usually claimed within 120 days. Open banking payments have no built-in chargeback, according to the material we reviewed.
Section 75: for credit card purchases between £100 and £30,000, the card company is jointly liable with the merchant. MoneyHelper says Section 75 covers credit cards only, so it does not apply to a bank payment. UK Finance says the time limit is six years.
Consumer rights: the Consumer Contracts Regulations 2013 give most distance buyers a 14-day cancellation right, with a refund due within 14 days of getting the goods back or evidence of return. The Consumer Rights Act 2015 covers faulty goods and digital content.
Refund window: Stripe's documentation says refunds on Pay by Bank can be made for up to 730 days.
Fees: Shopify's UK fee for card chargebacks is £10, charged by your bank and returned if you win. We did not review Pay by Bank fees.
Shopify: Shopify's help centre describes the card chargeback process. We did not review whether Pay by Bank is available on your store.
Shopify Protect: it does not cover UK stores, and it relates to Shop Pay orders, not bank payments.
Unauthorised payments: how banks and providers treat a claim that a bank payment was not authorised is not covered in the sources we reviewed. Ask your provider.

Common mistakes

Believing Pay by Bank chargebacks are zero and therefore disputes are zero.
Forgetting that consumer rights apply whatever the payment method.
Giving Pay by Bank disputes a slower refund process than card customers get.
Throwing away bank order records after the chargeback window, when refunds can last 730 days.
Making Pay by Bank the only option at checkout for high-value orders.
Skipping the written question to your provider about unauthorised payments.
Leaving refund confirmations out of Pay by Bank disputes, so the buyer has no record.
Not logging Pay by Bank disputes and complaints, so you cannot compare them with card disputes.

FAQ

Do Pay by Bank payments have chargebacks?

No. Open banking payments have no built-in chargeback, according to the material we reviewed, and Stripe's documentation says it offers no dispute support for Pay by Bank. A card chargeback is a card scheme arrangement, and a bank-to-bank payment does not use the card scheme.

Do Pay by Bank chargebacks stop customer disputes?

No. It removes the card chargeback route, but buyers still ask for refunds, still have consumer rights and can still complain to you, their bank or other bodies. Your refund process becomes the dispute process, so it has to be quick and documented.

Can I refund a Pay by Bank payment?

Yes. Stripe's documentation says refunds can be made for up to 730 days, according to the material we reviewed. Refund through your payment provider to the account that paid, send a confirmation with the date and reference, and keep the record for at least that long.

Does Section 75 apply to Pay by Bank?

No. MoneyHelper says Section 75 covers credit cards only, for purchases between £100 and £30,000, with the card company jointly liable. A bank payment is not a credit card payment, so Section 75 does not apply. Other consumer rights, such as the 14-day cancellation right, still do.

What happens to Pay by Bank disputes about unauthorised payments?

We did not review how banks and providers handle that, so we cannot say who bears the loss. Ask your payment provider in writing before you rely on Pay by Bank for high-value orders. Keep order, delivery and messages for any investigation.

Is Pay by Bank cheaper than cards?

We did not review Pay by Bank fees, so we cannot say. Compare your provider's fee with your card fees, and include the cost of refunds, disputes and any lost sales in the sum. Our worked examples ignore fee differences for that reason.

Can I offer Pay by Bank on Shopify in the UK?

We did not verify availability on Shopify for your store or provider. Check your payment settings and your provider's terms, and ask Shopify support if unsure. Do not announce it to customers until you have confirmed it works end to end, including refunds.

Do I still need delivery proof for Pay by Bank orders?

Yes. A buyer may complain, ask for a refund or take other action, and delivery proof settles item not received claims. Royal Mail captures a photo on delivery for Tracked 24 and Tracked 48 where no signature is needed. Evri offers a Digital Signature add-on at about 60p.

Will having no Pay by Bank chargebacks reduce my chargeback rate?

Bank payments do not create chargebacks, so they do not add to a card chargeback rate. Shopify's help centre says winning does not remove a card dispute from the rate. We did not review how processors compute rates across mixed payment methods, so ask yours.

Should I make Pay by Bank the default at checkout?

Not necessarily. Buyers may prefer cards for their protections, especially on larger orders. Offer it as an option, watch conversion and refund requests, and keep cards available. Run the break-even from this post with your own numbers before changing the default.

Start free trial

ChargeFix helps Shopify merchants turn order and delivery evidence into a clear response, so your time goes to the order, not the paperwork. Start free trial and keep your records ready whichever payment methods you offer, including the questions Pay by Bank chargebacks leave behind.

Pay by Bank chargebacks: does open banking end disputes for UK merchants?