Bank-to-bank payments: How they work and why businesses should use them

Bank-to-bank payments are growing rapidly, with global account-to-account (A2A) payments expected to reach $850 billion by 2026 (Juniper Research). Businesses and consumers are shifting away from credit cards and digital wallets in favor of direct bank transfers, which offer lower fees, faster settlement times, and enhanced security.

With the rise of real-time payments, Open Banking, and alternative payment methods, bank-to-bank transactions are reshaping the payments landscape, particularly for B2B, payroll, and high-value transactions. But how do these transfers work, and why are they becoming essential for businesses?

This article explores how bank-to-bank payments work, their advantages, and how businesses can optimize them using modern payment technologies.

What are bank-to-bank payments?

Bank-to-bank payments refer to direct money transfers between two bank accounts, bypassing intermediaries like card networks or third-party processors. These transfers use banking infrastructure to move funds securely, efficiently, and often at lower costs than traditional payment methods.

Types of bank-to-bank payments

Bank transfers vary based on speed, geographic reach, and processing networks. The most common types include:

• ACH transfers – Used in the United States for payroll, bill payments, and recurring transactions.
• Wire transfers – Faster but more expensive bank transfers, often used for international payments.
• SEPA transfers – The standard for bank-to-bank payments across Europe.
• SWIFT payments – Used for global cross-border transactions between banks.
• Real-time payments (RTP) – Instant bank transfers that are growing in popularity worldwide.

Each type of bank transfer has different processing times, fees, and use cases, making it essential for businesses to choose the right one based on their needs.

For a deep dive into global payment methods, read this guide on payment trends.

How do bank-to-bank payments work?

Bank transfers follow a standardized process depending on the type of transfer and the financial institutions involved.

Step-by-step breakdown

1. Payment initiation – The sender authorizes a transfer through their bank or payment service provider.
2. Verification and authorization – The bank verifies account details, available balance, and compliance with security protocols.
3. Processing and clearing – The transfer is routed through a clearing network such as ACH, SEPA, or SWIFT.
4. Settlement – Funds are deposited into the recipient’s account, completing the transaction.

For a breakdown of payment authorization vs. authentication, check out this article.

Key benefits of bank-to-bank payments for businesses

Bank-to-bank transfers offer several advantages over credit cards and digital wallets, particularly for B2B transactions, payroll, and high-value payments.

• Lower transaction fees – Unlike credit cards, which charge interchange fees, bank transfers have minimal processing costs.
• Faster settlement times – Real-time payments and SEPA Instant allow immediate fund transfers, improving cash flow.
• Reduced chargeback risks – Unlike card payments, bank transfers are irreversible, reducing fraudulent disputes.
• Stronger security – Encryption, two-factor authentication, and fraud detection tools make bank payments highly secure.
• Global reach – Bank transfers enable cross-border transactions, supporting businesses that operate internationally.

For insights on managing payment fees, check out this guide.

Bank-to-bank payments vs. other payment methods

Feature	Bank-to-Bank Transfers	Credit Cards	Digital Wallets
Transaction Speed	Instant – 3 Days	Instant	Instant
Fees	Low	High	Medium
Chargebacks	No	Yes	Limited
Best for	B2B, payroll, large transactions	Consumer purchases	Mobile and small transactions

Bank transfers are ideal for businesses handling large transactions, while credit cards and digital wallets remain dominant for everyday consumer purchases.

The role of payment orchestration in bank-to-bank payments

Many businesses struggle with managing multiple payment providers, optimizing bank transfers, and ensuring compliance. This is where payment orchestration platforms offer a solution.

How payment orchestration supports bank-to-bank payments

• Automates direct bank transfers – Businesses can process real-time payments, ACH, and wire transfers from a single platform.
• Reduces failed transactions – Smart routing automatically retries transactions if a payment fails.
• Ensures compliance – Built-in regulatory controls keep businesses compliant with banking and payment laws.
• Enhances security – AI-driven fraud detection and encryption protect sensitive payment data.

Learn more about the benefits of payment orchestration in this detailed guide.

Challenges of bank-to-bank payments and how to overcome them

Despite their benefits, bank transfers come with challenges that businesses must address.

• Security risks – Cyber threats such as account takeovers and fraudulent transfers require strong authentication and fraud detection tools.
• Regulatory compliance – Businesses processing cross-border payments must comply with local banking regulations.
• Consumer trust and adoption – Some customers still prefer credit cards due to fraud protection and chargeback options.

For compliance best practices, read this PCI compliance checklist.

Frequently asked questions (FAQs) about bank-to-bank payments

How secure are bank-to-bank payments?

Bank transfers use strong encryption, authentication protocols, and fraud detection systems, making them highly secure compared to other payment methods.

What is the difference between ACH and wire transfers?

ACH transfers are typically used for recurring payments and take 1-3 business days, while wire transfers are faster but come with higher fees.

Can bank-to-bank payments be reversed?

No, most bank transfers are irreversible, unlike credit card payments which allow chargebacks.

How do real-time payments work?

Real-time payments (RTP) settle instantly, 24/7, allowing businesses to move funds quickly without waiting for standard bank processing times.

Are bank transfers better than credit cards for businesses?

For B2B and high-value transactions, bank transfers are often more cost-effective and secure than credit cards, which have higher fees and chargeback risks.

Why businesses should prioritize bank-to-bank payments

Bank-to-bank payments are gaining momentum as businesses look for low-cost, secure, and efficient payment methods. With the rise of real-time payments, Open Banking, and AI-driven fraud prevention, direct bank transfers are becoming a preferred choice for businesses worldwide.

To fully optimize bank-to-bank payments, businesses should consider payment orchestration platforms, which automate transfers, reduce failures, and ensure compliance.

Want to enhance your bank payment strategy? Contact Gr4vy today.