Businesses are becoming keenly aware that offering a variety of payment methods for their customers is essential to remaining competitive in the digitally evolving market. Consumers want the choice to pay in a way that is convenient, secure, and efficient. Not offering their preferred form of payment could prompt them to take their business elsewhere.
Mastercard and J.P. Morgan Chase have addressed the importance of the customer payment experience by launching a pay-by-bank solution that enables billers to let customers pay their bills through their bank accounts.
With pay-by-bank, customers can now pay for recurring payments such as insurance, healthcare, utilities, rent, and tuition. Billers, whose customers are already using ACH to pay for their bills, can easily enable the pay-by-bank solution on their payments page. Customers simply must choose “pay-by-bank.” Then they will be asked to choose their bank and allow their bank information to be securely shared via Mastercard’s open-banking platform.
“This innovative payment option aligns with our commitment to providing our customers with convenient and secure payment choices,” Darrell Conn, Executive Director of Verizon, said in a prepared statement.
“We believe that Pay-by-bank will enhance the overall customer experience, making it easier and more efficient for our customers to pay their bills. We look forward to this partnership with J.P. Morgan and Mastercard to bring more innovative solutions to our customers.”
Pay-by-Bank Growing in Popularity
Pay-by-bank is increasingly preferred by merchants across the country as it reduces payment processing costs, as there are no swipe fees. And with inflation, high interest rates, and other economic factors negatively affecting the average consumer, more are turning away from credit card purchases and opting for debit cards and pay-by-bank at checkout.
Amid the current economic conditions, expect pay-by-bank to continue to gain ground as a payment method. It is likely that it will join the ranks of other current interest-free methods of payment, such as debit cards and cash.
“The JP Morgan-Mastercard pay-by-bank launch reiterates the growing interest and demand for direct-debit and open-banking solutions in the U.S.,” said Elisa Tavilla, Director of Debit Payments at Javelin Strategy & Research. “It’s not surprising that Verizon is piloting the solution, especially given AT&T, T-Mobile, and Verizon have all been pushing customers to set up autopay with lower-cost debit cards and ACH payments. Verizon was also one of the first merchants to allow its customers to make instant bill payments via RTP and Citi.
“Many recent developments, including the CFPB’s proposed Personal Financial Data Rights rule, the Fed potentially lowering the debit fee cap, and the possibility of credit card fee regulation, could have a significant impact on the U.S. payments landscape. Additionally, growing real-time payment adoption could enhance pay-by-bank solutions and generate new revenue opportunities.”