Cardless Payments for Online and In-Store: Guide for Merchants

Accepting payments shouldn’t be expensive or complicated. Yet for many merchants, high card fees, slow transactions, and abandoned checkouts are constant headaches. 

That’s why many merchants choose cardless payments. By skipping traditional card networks, they cut costs, speed up transactions, and improve user experience. From open banking to QR codes, modern solutions offer a smoother way to get paid.

In this article, we’ll break down what cardless transactions are, why they matter, and which solutions work best for online and offline merchants. You’ll also learn why open banking is the ultimate cardless payment method.

Rise of Cardless Payments Explained

Cards are still a major payment method, making up 27% of global e-commerce transactions in 2024. But their dominance is fading as cardless payments take over.

By 2030, credit card transactions are expected to grow by just 0.8%, while debit cards will decline by 1.9%. In contrast, digital wallets will rise by 18.1%, and account-to-account (A2A) cardless payments – like open banking pay-by-bank – are set to grow the fastest at 19.5%.

There are several reasons for this shift. Younger, digitally-native consumers, Millennials and Gen Z, are reshaping how people pay. They prefer mobile payments and the seamless UX of open banking over traditional methods. Mastercard’s Rise of Open Banking study confirms it – Gen Z is the most eager to embrace new fintech solutions.

Regulators are also driving the shift toward open banking. The EU’s Instant Payment Regulation (IPR) will require all banks and PSPs to process euro payments within 10 seconds, 24/7, across borders. Meanwhile, PSD3 aims to improve open banking with stronger security and more standardised APIs.

Cardless Payment Methods for Online Merchants

With this in mind, let’s explore cardless payment systems like open banking, direct debits, and manual transfers.

Digital wallets, like Apple Pay, PayPal and Google Pay, while a popular payment method, don’t make the list, as they’re still linked to cards in most cases.

Open Banking Payments or Pay-by-Bank

Open banking payments, also known as pay-by-bank, let customers pay directly from their bank accounts – no cards, no extra fees. Instead of entering card details, customers are redirected to their bank’s app or website, where they authorise the payment using their usual login credentials.

These cardless transactions happen instantly and securely through regulated APIs that banks share with licensed open banking providers like Noda. This cuts out card networks, reducing processing fees and eliminating chargeback risks.

Integrate Open Banking with Noda

Unlock seamless payments with Noda’s Open Banking solution. Connect to 2,000+ banks across 28 countries, accept multiple currencies, and process transactions instantly, without card fees or chargebacks.

Easily integrate with our Open Banking API or use our no-code e-commerce plugins for an easy setup. Whether you need pay-ins, payouts, or both, Noda makes it simple to add high-converting, secure open banking payments to your checkout.

Benefits of Open Banking

• Lower costs: Merchants save on card fees such as interchange and scheme charges as payments fully bypass card networks.
• Better UX: Customers enjoy a seamless checkout experience by authorising payments directly within their trusted bank’s app. This reduces shopping cart abandonment and brings you more revenues.
• Instant settlement: Unlike card payments, which can take days to clear, open banking payments settle instantly.
• No chargebacks: Since payments are authenticated by the customer within their banking interface, there’s no risk of fraudulent chargebacks. This protects businesses from disputes, saving time and reducing financial losses.

Direct Debits

Direct debits are a cardless payment solution that allows businesses to automatically collect recurring payments from customers' bank accounts without needing a card. Customers give prior authorisation by signing a digital direct debit mandate, and payments are pulled directly from their accounts on schedule. 

Direct Debit is a UK payment method, processed through the Bacs system, which takes about three days to transfer funds. Other countries have similar systems, like SEPA Direct Debit, which works across 36 European countries for payments in euros.

A direct debit is ideal for subscription services and membership-based businesses, where consistent, automated payments are key. Just as open banking payments, direct debits bypass card networks and therefore offer better transaction fees for merchants.

How to Integrate Direct Debits

Merchants have two options for accepting direct debit payments: using a third-party provider or managing the process themselves.

Third-party providers handle everything – compliance, customer authorisation, and payment processing – making setup quick and easy.

Managing direct debits in-house requires a Service User Number (SUN) and strict compliance with regulations like the Direct Debit Guarantee and GDPR. Businesses must get customer consent, securely store data, and keep accurate records.

Limitations of Direct Debits

• Slow setup: Getting started can take time. Businesses must follow legal requirements to collect direct debit mandates and get customer authorisation. They also must follow strict rules for storing customer payment data.
• Delayed payments: As mentioned above, Bacs system takes three days to process transactions. If you need instant access to funds, this can be a challenge.
• Failed payments: If a customer doesn’t have enough money in their account, the payment won’t go through, leading to extra admin work.

Manual Bank Transfers

Manual bank transfers are exactly what they sound to be: the customer manually transfers money to the merchant’s bank account. They enter the business’s account details and a reference code at checkout. Once the payment is received, the business verifies and confirms the order.

This cardless payment method is popular with B2B companies, service-based businesses, and high-ticket transactions where fees matter. It’s a low-cost option since there are usually no card processing fees. No chargebacks also mean fewer financial risks.

How to Integrate Manual Bank Transfers

To integrate manual bank transfers, merchants should provide clear payment instructions when sending an invoice to a client.

Since these transfers don’t update in real-time, a system for tracking payments and communicating with customers is essential. Manual transfers require more administrative effort from both businesses and customers

Limitations of Manual Transfers

• Poor UX: Customers must manually send the payment, which can lead to delays or mistakes if they enter the wrong details or forget, and worse customer experience.
• No real-time tracking: Businesses don’t see the payment status until the money arrives, which can mean extra back-and-forth with customers.
• Difficult reconciliation: Payments need to be manually matched to invoices, increasing admin work and the chance of errors.

Which Online Cardless Payment Method is Best for Your Business?

Choosing the right cardless payment system depends on your business model and customer preferences. Manual bank transfers work well for high-value B2B transactions but require more admin effort. Direct debits are great for subscription-based businesses but come with setup delays and potential failed payments.

For online businesses looking to cut costs and speed up transactions, open banking is the clear winner. It offers instant payments, lower fees, and no chargebacks – giving you a secure, seamless way to get paid while keeping customers happy.

Cardless Payments In-Store via QR Code

Cardless payments via pay-by-bank aren’t just for online stores–they work in physical shops too. With open banking and QR codes, businesses can accept instant, secure payments without cards and extra fees.

QR codes are a fast-growing cardless payment technology. With smartphone usage surging, QR payments are becoming a go-to option for retailers. By 2025, 42% of in-store mobile transactions will use QR codes, with China leading at 85% adoption. The global QR payments market is set to reach $45.9 billion by 2032, growing at 16.27% annually.

How Cardless QR Payments Work

Instead of using a card, customers just scan a QR code, confirm the payment on their phone, and they’re done – no extra hardware, no PINs.

Merchants can instantly generate a unique QR code linked to a branded payment page. Customers scan it, check the details, choose their payment method, and approve the transaction, all in a matter of seconds.

At Noda, for example, our QR payment solution enables merchants to generate custom QR codes for pay-by-bank transfers, offering multiple payment scenarios:

• Dynamic QR codes: Customers manually enter the amount before paying.
• Fixed-amount QR codes: Pre-set payment amounts (e.g., £10, £20, £50).
• Merchant-controlled QR codes: The business sets the amount before generating the code.

Take Payments Anywhere with Noda’s QR Codes

Getting paid has never been easier. With Noda, you can generate scannable QR codes for your offline business in seconds. Our no-code payment pages offer a seamless, branded checkout experience, making it easy to integrate pay-by-bank into your in-store checkout without any development work.

Unlike traditional card payments, Noda’s pay-by-bank solution eliminates card fees and chargebacks while ensuring real-time fund settlement. That means lower costs, fewer risks, and faster access to your money.

Why Cardless QR Code Payments Are Smart Choice for Retailers

• Lower costs: No need for pricey card terminals, just a smartphone and a QR code.
• Faster checkouts: Customers scan, pay, and go. No cash, no card swipes, no waiting.
• Easy setup: Merchants can start generating QR codes instantly – no complicated tech or integrations needed.
• Better customer experience: A smooth, cardless checkout keeps lines short and customers happy.
• Instant settlement: No more waiting for card payments to clear as QR payments via banks process instantly. With Noda, for example, you can track transactions in real-time through the QR Dashboard, and funds settle in your merchant account immediately.