Cards vs Open Banking Pay-by-Bank (A2A) Comparison in the UAE
Cards are familiar. Pay-by-bank is new. In the UAE, both are now available to SMEs – but they behave very differently when it comes to fees, cash flow, and risk.
How card payments works (UAE)
When a customer taps or enters their card, this is roughly what happens:
- Card details are sent to your payment gateway or POS.
- The transaction is routed via card schemes (Visa, Mastercard, etc.) to the customer’s issuing bank.
- The bank authorizes or declines the transaction.
- The acquirer settles funds to your merchant account later, minus fees.
For many UAE SMEs:
- Blended MDR (merchant discount rate) on domestic cards typically falls around 2–3% per transaction, sometimes more for higher-risk sectors or international cards.
- Settlement to your account is commonly T+1 to T+3 business days, depending on provider and risk profile.
- On top of that, card schemes give customers strong dispute rights (chargebacks), which is great for consumers but can be costly and time-consuming for merchants.
How pay-by-bank (A2A) works
Pay-by-bank uses open-banking / Open Finance APIs and instant rails like Aani to move money directly from the customer’s bank account to yours, without going through card schemes.
The flow usually looks like this:
- Customer chooses "Pay by Bank" on your checkout or payment link.
- They select their bank from a list of connected UAE banks.
- They’re redirected to their existing mobile banking app or secure online banking.
- They authenticate (biometrics/OTP) and confirm the payment.
- Funds move over instant payment rails such as Aani and appear in your account, often within seconds, with instant success/fail status.
There is no card number, no card scheme, and typically no card-style chargeback: the payment is a push transfer that the customer has explicitly approved inside their bank.
Fees – Cards vs Pay-by-Bank
Because pay-by-bank (account-to-account) payments don't run on card schemes, there's no interchange and no card network fee baked in. Instead, providers charge a simpler platform/service fee on top of instant payment rails like Aani, which is why fees can sit closer to ~1% instead of typical card MDR.
Typical blended MDR: Roughly 2–3% per domestic card transaction for many merchants, often presented as an "all-in" rate. Guides and UAE price cards for gateways such as Stripe or Amazon Payment Services sit around 2.8–2.9% + a small AED fee for local cards.
How fees are structured: Most processors combine interchange + scheme + acquirer markup into that rate. Usually as percentage + fixed fee (e.g. 2.9% + AED 1 per successful charge).
Impact for SMEs: On high-ticket sales, this "blended" card fee quickly becomes one of the largest line items in your payment stack.
No card scheme layer: Open-banking / A2A payments move money directly between bank accounts, which eliminates card networks and their interchange fees.
Typical pricing: Many early pay-by-bank offerings position fees at around ~1% per domestic transaction as a competitive alternative to card MDR. Exact pricing depends on provider, risk profile and volume, but the structural cost base is lower.
Where it shines: The bigger the ticket and the more local your customer base, the more that gap between ~3% card fees vs ~1% bank-to-bank matters.
Speed & cash flow
Settlement timing: Card transactions typically settle T+1 to T+3 business days after authorization; weekends and holidays can push funds out even further.
Cash-flow effect: You see an instant authorization, but the cash lands in your account later, which can make payroll, supplier payments and rent more dependent on overdrafts or working-capital lines.
Best mental model: Cards feel fast at checkout, but they're closer to a "next-day bank deposit" from a cash-flow point of view.
Instant settlement via Aani: Aani, operated by Al Etihad Payments under the Central Bank of the UAE, processes domestic transfers in under 10 seconds, 24/7, with instant success/fail status and support for QR and proxy payments (mobile, email).
Real-time usage is exploding: UAE real-time payments grew 53% year-on-year in 2023, reaching 58 million transactions, and are forecast to continue rising sharply.
Cash-flow effect: When a customer pays by bank, funds and confirmation arrive together, so daily takings are in your account immediately instead of sitting in a card settlement pipeline.
Risk, chargebacks & fraud
Chargebacks by design: Card schemes enable customers to dispute transactions through their issuing bank, initiating a multi-step chargeback process where funds can be retrieved from the merchant during evidence review.
Operational drag: Disputes often involve strict timeframes (weeks to months), require document uploads, and may lead to second-level appeals. Merchants can lose revenue even if goods were delivered correctly.
Fraud profile: Card-not-present channels (online / phone) are frequently targeted for stolen card data and friendly fraud, which increases risk-management costs for merchants.
Bank-grade authentication: A2A payments, initiated via open banking, utilize strong customer authentication within the customer's existing banking app (e.g., login, biometrics, OTP), and no card details are shared with the merchant.
No card-scheme chargebacks: Account-to-account payments are "push" transfers. Once authorized, there is no traditional card chargeback mechanism. If issues arise, merchants manage refunds and customer care directly, bypassing network dispute rules.
Risk profile: Fraud in A2A shifts from stolen card numbers to social-engineering and account-takeover risks. However, strong bank controls and step-up authentication significantly reduce classic card-not-present fraud exposure. Clear refund/cancellation policies are still necessary, but merchants are free from constant chargeback uncertainty.
Customer experience & habits
Deeply familiar behaviour: For most UAE customers, "paying by card" means tap, chip-and-PIN, or saving a card online – a behaviour reinforced by years of everyday use.
Credit & rewards: Cards allow customers to spread payments and earn points, miles, or cashback, which helps retain them even when merchant fees are high.
Great for small tickets: For low to medium-value purchases, card expectations are strong, and many shoppers instinctively reach for physical cards or saved card details.
Feels like a smart bank transfer: Pay-by-bank combines the familiarity of a bank transfer with a streamlined user experience (UX). This means no IBAN copy/paste, no need to add beneficiaries, and no screenshots. Customers simply select "Pay from your bank," choose their UAE bank, and approve the payment within their banking app.
No new app needed: Customers utilize their existing bank app, which they already trust for bill payments and transfers. Open-banking APIs seamlessly connect this app to the checkout process.
Best fit: This method is ideal for larger, domestic payments where customers are comfortable paying directly from their bank account (examples include tuition, medical packages, car deposits, and jewellery). It also suits merchants looking for a fast, secure, and low-fee alternative to card payments.
Real-world scenarios
Ticket range: AED 50k–200k
Typical need: high-ticket showroom payments, deposits and balloon instalments for UAE buyers.
Card:
- On a AED 120,000 car sale, a typical 2.5% card fee means around AED 3,000 in processing costs.
- Large transactions can hit card limits or trigger risk checks, leading to declines and awkward back-and-forth at the showroom.
- Settlement usually lands T+1 to T+3 business days, so weekend deals may not hit the dealer's account until after the weekend.
Pay-by-bank:
- Customer scans a QR code or taps a payment link in the showroom and approves the transfer in their UAE banking app.
- Funds move over instant rails like Aani, giving the dealer real-time confirmation and settlement in seconds, 24/7.
- At ~1% fees, that same AED 120,000 payment would cost about AED 1,200, saving roughly AED 1,800 while still providing a digital, auditable payment trail.
Ticket range: AED 10k–200k
Typical need: High-value gold, diamond, watch, and luxury item purchases for residents and tourists.
Card:
- UAE gold and jewelry retailers typically face 1.8–2.25% card fees on each transaction.
- 1 Regulations do not permit passing a separate "card surcharge" to customers.
- On an AED 80,000 purchase, even a 2.25% fee amounts to AED 1,800, which comes directly out of already tight jewelry margins.
- High values combined with card-not-present sales (remote orders, deposits) increase chargeback and fraud exposure, particularly for luxury watches and branded pieces.
Pay-by-bank:
- Customers confirm the price in-store or via a secure invoice and complete an instant bank transfer through pay-by-bank, with no extra card fee line item.
- Funds arrive in seconds, allowing the jeweler to release goods or ship immediately without waiting for card settlement or worrying about chargeback windows.
- With fees closer to ~1%, the merchant retains more margin on each high-ticket sale, while still offering cards for tourists and loyalty-driven customers.
Ticket range: AED 2k–25k
Typical need: one-off procedures, treatment plans and follow-up packages.
Card:
- Common elective treatments like dental implants in Dubai run from AED 3,000–16,000+, so a 2.5–3% card fee can easily be AED 100–500 per patient.
- Cards support instalments and credit limits, which can help patients spread cost – but the clinic absorbs the MDR and waits for T+1-T+3 settlement.
- Higher ticket sizes increase exposure to chargebacks and disputes if patients raise issues after treatment.
Pay-by-bank:
- Clinic sends a payment link by SMS/WhatsApp or shows a QR at reception; the patient authorises via their bank app, just like a normal transfer.
- Funds settle instantly to the clinic's account, making it easier to manage payroll, rent and supplier bills without waiting for card payouts.
- Lower ~1% fees keep more of each treatment margin in the practice, while still allowing the clinic to offer cards as an option when patients insist.
Ticket range: AED 10k–60k per year
Typical need: recurring term fees, registration payments and activity charges for UAE families.
Card:
- Many UAE schools charge annual tuition from around AED 7,000 up to 70,000+, depending on curriculum and grade; a 2.5% card fee on AED 40,000 is AED 1,000 per child.
- Parents like the convenience and rewards of card payments, and some schools even promote card-linked offers through partner banks.
- For the school, card payouts arrive days later and create reconciliation work when multiple payments are made for siblings and activities.
Pay-by-bank:
- The bursar's office can attach a Pay-by-Bank link to invoices or show QR codes at the fee counter; parents complete the payment from their existing bank app.
- Instant settlement and richer payment data make it easier to match payments to students and terms, cutting manual chasing and errors.
- Lower transaction fees on larger tuition amounts help schools keep more budget for teaching, infrastructure and student services, while cards remain available for families that need instalments.
When to use which (practical recommendation)
Instead of "either/or", think hybrid:
- International customers and card-only travellers.
- Smaller, everyday purchases where the absolute fee is low.
- Use cases where card instalment plans or rewards are key to conversion.
- Domestic UAE customers paying from local accounts.
- High-ticket, margin-sensitive invoices (automotive, jewelry, clinics, tuition, B2B services).
- Repeat B2B customers who are used to paying via bank transfer anyway.
A sensible strategy for most UAE SMEs:
Keep your existing card gateway as a safety net, but route as many domestic high-ticket payments as possible through a low-fee pay-by-bank solution like Census Pay to protect your margins and improve cash flow.
Cards vs Wallets vs Pay-by-bank comparison
A simple matrix to see how the four main rails compare on fees, speed, risk, hardware and reconciliation complexity.
| Category | Card gateway / POS | Pay-by-bank (Census Pay) | Wallets & payment links (card-based) | Traditional bank transfer |
|---|---|---|---|---|
| Typical fees | ~2.3–3.0% + AED per transaction | ~1% platform fee for domestic payments | Similar to cards (~2–3%) | Bank transfer fees only (usually small or free to customer) |
| Settlement | T+1–T+3 days | Seconds, 24/7 | T+1–T+3 days | 1–2 business days |
| Chargebacks | Yes, card schemes allow disputes | No chargebacks; refunds handled by merchant policies | Yes, via card rails | No structured chargeback; disputes handled manually |
| Hardware | POS terminals or integrated checkout | None – QR codes and payment links | Usually no terminal; links and QR | None |
| Reconciliation | Medium complexity (batches, fees) | High – instant confirmation and structured data | Medium | Manual, often messy |