The “pay-by-bank” payment method, which bypasses credit or debit cards and allows users to move funds directly to the recipient, has become increasingly popular in international markets, but faces challenges in US retail, according to PaymentsDive.
Pay-by-bank at POS is common in the international retail industry, such as in Brazil and India. Real-time payment systems UPI and Pix have expanded their operations in these countries for everyday transactions.
The reason for the slow adoption of pay-by-bank at checkout in the US is because of limited changes to in-store check-out interfaces and because US shoppers are most comfortable paying via card. However, these hurdles may be worth overcoming for retailers who want to ditch steep swipe fees that come with card transactions.
Primary use of the pay-by-bank method in the US has been for out-of-store transactions where check payments are common such as for rent, utilities and healthcare.
“The point of sale is not the initial place where it will start,” Ashley Cornall, Payments Product Manager at Plaid, told PaymentsDive. “People are already paying by bank. The most common one is bill-pay.”