Utilization of Pay-by-Bank: Under Which Circumstances?
Streamlining Transactions with Pay-by-Bank: A Comprehensive Guide for Merchants
Pay-by-Bank, a method for simplifying transactions, is gaining attention in the world of commerce. A recent report from Javelin Strategy & Research, based on data from North American PaymentInsights, December 2024, delves into the potential of Pay-by-Bank, powered by open banking and real-time payment infrastructure.
The report outlines the core advantages, technical requirements, regulatory landscape, and potential obstacles of Pay-by-Bank. It equips merchants with clear guidance and actionable insights, enabling them to make informed decisions about adopting this innovative payment method.
According to the report, Pay-by-Bank enables direct transfers from a consumer's bank account without relying on cards or third-party wallets, making it a fast, secure, and cost-effective alternative to traditional payment methods.
Subscriptions account for 16% of Pay-by-Bank usage, with recurring bill payments making up 21%. In-store purchases account for 9%, while one-time bill payments account for 24%. Ecommerce purchases account for 6% of Pay-by-Bank usage.
However, the report does not provide specific numbers for the usage of Pay-by-Bank in different categories like bill payments, eCommerce, in-store shopping, or subscriptions.
Common scenarios for implementing Pay-by-Bank in real-world commerce involve transactions where the sender and receiver know and trust each other, agree on the payment amount, and accept that the payment is final with no recourse once made. This is because current real-time payment systems do not support dispute mechanisms or merchant-initiated payment requests.
Real-time payments networks, such as The Clearing House's RTP and the Federal Reserve's FedNow, focus on sending money only, lacking the ability for merchants to initiate collect requests. This limits their broader merchant adoption for purchases like retail point-of-sale transactions.
In summary, Pay-by-Bank is currently best suited for scenarios with mutual trust between payer and payee, pre-agreed payment amounts, no expectation of dispute or chargebacks, and situations where the payer initiates the payment voluntarily. These constraints guide merchants on the realistic contexts where Pay-by-Bank can be implemented successfully.
The report serves as a practical resource for merchants evaluating Pay-by-Bank, providing them with the knowledge they need to navigate the regulatory landscape and overcome potential obstacles. By adopting Pay-by-Bank, merchants can streamline their transactions, offering their customers a faster, more secure, and cost-effective payment option.
- In the realm of business and finance, merchants can utilise Pay-by-Bank, a modern payment method, to streamline their transactions and offer customers a faster, more secure, and cost-effective option.
- The integration of technology, particularly open banking and real-time payment infrastructure, powers Pay-by-Bank, making it a viable alternative for businesses in various sectors, including but not limited to technology.
