Leveraging Pay-by-bank for collections and bill pay
Pay-by-bank is becoming mainstream, but collections and bill pay are where it can reliably deliver substantial net savings. The reason is simple: the customer intent is high, the value is clear, and the operating model can be engineered for predictable outcomes.
The question behind this piece
Pay-by-bank is often positioned as cheaper than cards, but the true economics show up in the back office: returns, disputes, support contacts, reconciliation, and fraud controls. Collections and bill pay are different from general checkout. They are higher intent, more repeatable, and easier to operationalize. Where does pay-by-bank actually print savings in collections and bill pay, and what has to be designed so the operating load does not erase the benefit?
Why this matters now
Bank-based bill payment is already massive. In the US, Nacha reports 17.17 billion consumer-initiated bill payments and other transfers via ACH in 2025. (Nacha) That is not a niche behavior. It is a dominant pattern that can be modernized.
In markets with mature open banking payment initiation, adoption is now material. The UK’s Open Banking entity reports 351 million open banking payment transactions in 2025, up 57% year over year, with strong growth in single domestic payments and recurring-style flows. (Open Banking) The UK government has explicitly framed variable recurring payments pilots around lower-risk use cases such as paying bills, reinforcing that bill pay is a natural beachhead for account-to-account payments. (GOV.UK)
At the same time, the operational bar is rising. The Federal Reserve cautions that blanket savings claims for pay-by-bank should be treated carefully because provider pricing, integration costs, and operational expenses can vary widely. It also flags that dispute and fraud liability processes are not always transparent in some deployments, creating operational and reputational risk if not designed clearly. (Federal Reserve)
Bill pay is already bank-based at scale. The opportunity is to modernize authorization, economics, and operations.
Our perspective
Collections and bill pay are the most reliable pay-by-bank wedge because they combine high intent with repeatable operating mechanics. The win is not “cheaper rails.” The win is a lower-cost collections system with fewer exceptions and tighter reconciliation.
Focus on high-intent moments where customers want control.
The strongest pay-by-bank moments are those where the customer is already trying to complete a payment, not browsing. This includes “pay now” links from statements, reminders, and delinquency outreach, as well as autopay enrollment and managed recurring payments. It also includes catch-up payments, partial payments, and settlement plans, and high-frequency categories like utility and telecom bill pay, where certainty and confirmation matter. This is consistent with how regulators are shaping early use cases in the UK, prioritizing bill pay as a lower-risk starting point. (GOV.UK)
Build the business case as total collections cost, not acceptance cost.
A CFO-grade model for collections should capture payment processing fees plus any adoption incentives, return rates and return handling cost (including reattempt logic), disputes, complaints, and support contacts per 1,000 payments, and reconciliation and exception handling effort, including write-offs. It should also reflect cash flow effects from faster completion and fewer failed payments. The Federal Reserve’s note is clear that savings are use-case dependent and should be tested against real operational costs, not assumed. (Federal Reserve)
Treat recurring payments as an operating product, not a button.
Bill pay wins compound when customers can set predictable habits. Variable recurring payments are scaling in the UK, and the FCA notes VRPs are now a meaningful share of open banking activity. (FCA) The lesson is not to copy UK mechanics directly. The lesson is to treat recurring pay-by-bank as a product with clear customer controls over amount and timing, strong confirmation and status visibility, and failure handling that does not create call center spikes.
Define recourse and dispute handling upfront.
Collections does not eliminate disputes. It changes expectations. The Federal Reserve highlights that pay-by-bank deployments can create confusion if it is unclear who owns disputes and liability. (Federal Reserve) Leaders should define, in plain terms, what happens when a customer claims an error, what evidence is captured at authorization, who investigates and refunds (and how quickly), and how outcomes are communicated across channels.
Engineer returns and exceptions like a first-class workflow.
Collections programs succeed or fail on exception rates. The operating model should include account validation and pre-checks where available, reason-coded return workflows with automated reattempt rules, thresholds and routing for manual review, and daily exception dashboards tied to owners and SLAs.
Run pay-by-bank with a weekly operating cadence.
Scaled bill pay programs manage a small set of metrics weekly, including completion rate by channel and segment, return rate and root causes, dispute and complaint rate plus time-to-resolution, support contacts per 1,000 payments, and net economics after incentives and operational load.
The rail is not the strategy. The strategy is a lower-cost collections operating system.
In 3–4 weeks, Strathen Group can deliver a decision-ready package to prove where pay-by-bank prints savings in collections and bill pay, and what must be true to scale. This includes a use-case scorecard to select the highest-value payment moments (statement pay, reminders, delinquency, settlement plans, autopay), a CFO-grade unit economics model that captures fees, incentives, fraud, returns, disputes, support contacts, and reconciliation effort, and a dispute and recourse kit with policies, scripts, evidence standards, and escalation paths. It also includes a returns and exception operating model with SLAs, dashboards, and reason-code workflows, plus a pilot plan and measurement framework with clear go/no-go thresholds and scale criteria.
For teams ready to move beyond the pilot, we can extend the work into a broader implementation program by standing up a weekly operating cadence with owners, metrics, and decision rights, integrating pay-by-bank into collections workflows (CRM/servicing, comms journeys, payment orchestration, and reconciliation), and optimizing adoption levers (incentives, messaging, routing, and channel strategy) while tapering incentives based on elasticity. The program also hardens risk controls for account validation, limits, monitoring, and fraud response, and produces a repeatable playbook to expand into additional segments, geographies, or brands.
