Pay by Bank emerging to soothe sector friction

Hospitality businesses have long faced a difficult balancing act when it comes to payments. Guests expect convenience, finance teams need efficiency and operators want to minimise costs, fraud and administrative burden. Increasingly, Pay by Bank is emerging as a solution that addresses all three, particularly for high-value transactions such as weddings, meetings, events and group bookings.

During a recent HOSPA webinar, Reduce Payment Costs and Friction with Pay by Bank, executives  from Prommt and Markree Castle discussed how open banking technology was changing the way hospitality businesses take payments. Pay by Bank enables customers to make secure account-to-account transfers directly from their bank account to a merchant.

As Ian Murray, VP, Client Growth, Prommt, explained: "Pay-by-bank or open banking is, essentially a payment method which facilitates an account-to-account bank transfer between a customer and the merchant they're paying for."

Unlike traditional bank transfers, the process is fully integrated into the customer journey. Guests select their bank, authenticate using their usual banking security methods, and complete the payment without manually entering account details. According to Murray, "The payment settles directly into that merchant's bank account, and it's a quick and seamless payment option."

The technology is built on the foundations of Open Banking regulations introduced through PSD2, which required banks to provide secure API access to customer accounts. The result has been the development of payment experiences that combine strong security with a streamlined checkout process.

For hospitality operators, the appeal is clear. Hotels and venues process payments through multiple channels, often taking deposits, balance payments, remote transactions and event bookings months in advance. Prompt has seen particularly strong adoption among businesses handling large domestic transactions. As Murray noted, "If open banking were a payment option, like a gateway, it would be our largest one by a mile."

One hospitality business that has embraced the technology is Markree Castle in Ireland, a venue that hosts around 180 weddings each year. GM Nicholas Ryan explained how the business has integrated Pay by Bank into its operations. "We are using it primarily for wedding deposits," he said.

The castle collects multiple payments throughout the wedding booking journey. "We would take three wedding deposits in advance of a wedding, the initial booking deposit, a €2,000 deposit, a final €1,000 deposit and then what we've started to use it at the moment is that we send people a link a week before their wedding so they can pay their final balance."

The results have been significant. "Nearly all of our Irish payments are now coming through. Pay-by-bank, which is probably 47% of our deposit payments at the moment are pay-by-bank, which is great."

While the savings on transaction fees are important, one of the most immediate benefits has been the reduction in administration. Historically, large bank transfers often arrived with limited information attached, leaving finance teams to spend valuable time identifying who had made a payment and what it related to.

Ryan described the challenge: "We used to spend a lot of time trying to figure out who was the payment from, maybe it's from somebody's parents."

Today, payment requests are pre-populated with booking information, wedding dates and customer details, making reconciliation far simpler. As Ryan put it, "It's kind of eliminated all of that time."

The system also creates visibility across departments. Automated notifications ensure that both operational teams and finance departments know when payment requests have been sent and when funds have been received, removing much of the uncertainty that can accompany traditional bank transfers.

Cost reduction remains a major driver behind adoption. Ryan highlighted one of the most obvious advantages: "There's also the financial saving of pay-by-bank rather than pay-by-card, you know, so you're saving on transaction fees."

For Prompt, the financial benefits extend beyond the direct transaction cost. Automating payment requests, reminders and reconciliation can reduce operational overheads and free up staff time. Murray identified cost reduction as one of the core benefits of the technology, saying, "The first one is the saving." He added that "The kind of costing is very significant once you kind of… once you know where it can be utilised."

Security is another major consideration. Instead of sharing card details or manually entering banking information, customers authenticate directly with their own bank. As Murray explained, "The customer has to authenticate themselves through their open banking."

He continued: "It's your customer's retail bank that is putting their customer through their security and authentication process."

Prommt has added additional layers of protection around the payment process, including payment verification screens, mandatory acceptance of terms and conditions, and monitoring for suspicious activity. For hospitality businesses, this can help reduce both fraud risks and chargebacks.

When asked about chargebacks at Markree Castle, Ryan said: "I don't think we've ever dealt with a chargeback since we moved over to Prommt, I'll be honest with you."

Another important factor is customer choice. While Pay by Bank works particularly well for domestic transactions, many hospitality businesses serve international guests. Markree Castle has adapted its approach accordingly.

"For domestic, we will send only a bank link to start with. If we have American clients, we'll send them the card payment option as well," Ryan explained.

The guest experience remains consistent regardless of which payment method is used. "They actually nearly go through the same procedure, we send them the same link, it all looks the same, it feels the same, they just use a different final payment method."

Although weddings provide a natural use case because of the transaction values involved, Markree Castle has expanded Pay by Bank into other parts of the business. Ryan explained: "We use it for smaller items as well, so we don't take card payments over the phone anymore."

The venue now uses the technology for everything from lost property postage to advance room payments and ad hoc guest charges. Even for relatively small transactions, the ability to track payments automatically and reduce manual handling has proved valuable.

As hospitality businesses continue to look for ways to improve efficiency while protecting margins, Pay by Bank is becoming an increasingly attractive option. The technology combines lower payment costs with faster settlement, improved security, reduced administration and greater visibility over transactions. For operators managing high-value bookings and events, those advantages can have a measurable impact on both the guest experience and the bottom line.

The discussion highlighted that modern payment strategies are no longer solely about processing transactions. They are about providing convenience, reducing friction and giving guests the flexibility to pay in the way that suits them best. As Murray concluded: "It's the branding, it's the experience, and it's also letting people pay you how they want to pay."