Cheaper and faster Direct Debit alternative?
In early–mid 2027, UK businesses will have a cheaper and faster alternative to standard BACS Direct Debit through Open Banking.
Direct Debit alternative?
Open Banking is not a new concept to the UK. Billions of pounds are already flowing through Open Banking, with many different use cases. However all Open Banking payments currently need to be authorised by the payee each time.
Very shortly, businesses will be able to run repeat payments on buyer bank accounts and receive funds instantly. Additionally, pricing is expected to be lower than traditional BACS Direct Debit, and certainly lower than cards.
- Buyer authorises once, with a mandate
- Funds move on the BACS cycle, so they take days to arrive
- Higher fees via third-party providers
- Buyer authorises once
- Funds arrive instantly
- Pricing expected to be lower
What is Open Banking?
Open Banking enables people and businesses to authorise payments from their bank account to another bank account over bank rails.
FCA-regulated parties (e.g. Finexer, Plaid, TrueLayer) build technology that allows funds to move between bank accounts. Banks are mandated by the FCA to make their customer data available (where the customer agrees) to third parties, for the purposes of enhancing customer experiences.
It’s likely you’ve already come across Open Banking when paying for utilities or similar services.
How can I use Open Banking today?
Currently (late 2026), you’re already able to offer ‘Pay by Bank’; however, buyer authorisation is required every time. This contrasts with BACS Direct Debit, where recurring payments can be initiated and authorisation occurs once.
However, the main advantage is lower cost. Cost equates to around 0.50% per payment, which is significantly cheaper than cards and Direct Debit via third-party providers (e.g. Stripe, GoCardless).
| Buyer authorises | Funds arrive | Cost | |
|---|---|---|---|
| Pay by Bank (today) | Every payment | Instantly | Around 0.5% |
| BACS Direct Debit | Once | BACS cycle (days) | 1%–1.5% via third-party providers |
| Recurring Pay by Bank (2027) | Once | Instantly | Expected to be lower than Direct Debit |
When will Open Banking allow for recurring payments?
Recurring Pay by Bank payments are currently live in a “Wave 1” phase, overseen by the FCA, which is restricted to “high-trust” organisations such as charities, utilities and government bodies.
In early–mid 2027, “Wave 2” is expected to commence, rolling out recurring payments to “e-commerce” categories. This will allow payment companies such as GoCardless, Stripe and Orderlinks to extend recurring Pay by Bank to businesses.
Whilst the FCA hasn’t provided an exact date, when this does happen in 2027, you’ll have a genuine BACS Direct Debit alternative that is faster and cheaper (in some circumstances).
With Orderlinks, the recurring payment will be automated and triggered on the invoice payment date. You’ll receive funds in real time, with instant notification to buyer and seller.
No approval needed for each invoice.
On the invoice payment date.
No waiting on the BACS cycle.
Buyer and seller see the payment straight away.
Wave 2 timing is an industry expectation and depends on government legislation; no date has been confirmed. Sources: UK Payments Initiative commercial VRP scheme coverage (Payment Expert, May and October 2026).
Get paid by bank with Orderlinks
Recurring payments will be triggered automatically on the invoice payment date, with funds in real time and instant notifications to buyer and seller.
See how OrderHub works