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CoverStory

reported that better than half (54 percent) of credit card- Walmart has been trying to move the needle on pay-by-
holders eligible for mobile payment apps had used the ser- bank acceptance. It entered an agreement this year with
vices as of April 2024. Fiserv that allows online shoppers to make real-time pay-
ments directly from their bank accounts. And Fiserv is
BNPL and pay by bank said to be working with several other large merchants to
Buy now, pay later plans have been taking off, especially support pay-by-bank. Driving these initiatives is Fiserv's
among what the Federal Reserve Bank of New York has re- NOW network, which links to real-time payment systems,
ferred to as "financially fragile" Americans. Surprisingly, like the Federal Reserve's FedNow network and RTP, oper-
income isn't the primary factor driving BNPL; among rea- ated by The Clearing House.
sons cited are deferred interest and convenience.
In addition to large retailers, pay-by-bank, also known as
A study by the New York Fed found the biggest obstacle account-to-account payments, has been gaining with can-
to growth for BNPL is first-time use. The study also found nabis dispensaries. One dispensary network, CanPay, is
that higher-income consumers use this payment method using the ACH to clear payments. Mastercard and JPM-
for purchasing higher-value items. organ Chase have been piloting a similar ACH initiative
with mainstream merchants.
The notion of foregoing card accounts and paying through
a bank account – known as pay-by-bank – also is gaining A report published earlier this year by Visa found that
traction with consumers, merchants and even banks. Ac- "almost everyone" has paid a business from their bank ac-
cording to the FIS Global Payments Report 2024, merchants count at some point, typically using traditional bill pay-
"crave" the lower cost of acceptance – typically a flat rate ment services. But Visa reported that about a quarter of
of around 25 cents to $1. There's a problem, however: these consumers surveyed would prefer to pay from their bank
schemes lack chargeback structures and rewards systems accounts when shopping online.
that are popular with card schemes. Patti Murphy, self-described payments maven of the fourth estate, is
senior editor at the Green Sheet. She also co-hosts the Merchant Sales
Podcast, and is president of ProScribes Ink.

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