A catch-up payment on an arrears balance is exactly the payment you least want to run over a card. It is often small, the customer is already stretched, and a percentage fee on it is pure margin lost on money you were owed anyway. Pay by Bank collects the same payment a better way.
Why arrears end up on cards
When a collection fails and someone needs to pay a catch-up quickly, a card is the path of least resistance. It is familiar, it is to hand, and it feels immediate. So a lot of recovered value comes in over the most expensive rail you run, on the payments where margin matters most.
What that quietly costs
A card charges a percentage of value, so even a small arrears payment carries a fee, and the smaller the balance the more that fee bites in relative terms. On top of the cost, a card payment can be charged back, and handling card details brings its own obligations. None of that is ideal on a payment from a customer who is already behind.
What Pay by Bank changes
Pay by Bank sends the customer a link, they approve a bank-to-bank transfer in their own banking app, and the money settles over Faster Payments. There are no card details to capture, no chargeback mechanism behind the payment, and the cost is a fixed amount per transaction rather than a percentage. You can deliver the link however the customer will actually open it, by SMS, email or messaging.
The collection-experience angle
There is a fairness point here too. Adding a card surcharge to a customer who has missed a payment is a poor experience and, increasingly, poor practice. Collecting a catch-up over a bank link, for a lower fixed cost, treats the arrears payment as what it is: money owed, recovered cleanly, without penalising the person for paying.
When cards still make sense
This is not an argument against cards. Where the customer is present and expects to tap or type a card, cards belong in the mix. The point is narrower: for an arrears catch-up sent as a link, a bank payment is almost always the better rail.
Doing it without a second system
Orchestration means you do not run arrears collection as a separate tool. Credit Canary generates the Pay by Bank request, delivers it over the right channel, settles it and reconciles it against the right account on one ledger, alongside your Direct Debit and other rails. Where a one-off catch-up becomes a pattern, the same integration can move the customer onto a durable recurring rail.