Chase and Mastercard Launch New ‘Pay-by-Bank’ Option
Chase and Mastercard have launched Pay-by-Bank, an ACH payment that uses open banking. It enables consumers to permission their financial data to be shared seamlessly between trusted parties to let them pay bills directly from their bank account with greater security. No longer will they be faced with the tedium of typing in routing and account numbers each time they need to pay a bill. For billers and merchants, it automates consumer onboarding and reduces the risk and cost of storing bank account information.
Pay-by-Bank holds huge potential for billers to take the pain out of recurring payments such as rent, utilities, payments to government, tuition, insurance, and health care where ACH is the primary medium of payment.
Billers whose consumers already pay with ACH can choose to integrate the J.P. Morgan Payments Pay-by-Bank solution on their existing payments page. At checkout, consumers select “Pay-by-Bank,” where they will be prompted to find their bank, verify themselves using their own bank’s familiar authentication process — a biometric scan, for example — and securely share their bank account information with JPMC to complete the payment on behalf of the biller.
J.P. Morgan Payments and Mastercard are piloting Pay-By-Bank with a small number of U.S.-based billers and merchants this year and expect to expand in 2023.
“Our aim is to stay at the forefront of payments innovation,” says Max Neukirchen, head of Payments & Commerce solutions, J.P. Morgan Payments. “We’re delighted to work with Mastercard on this solution as their open banking capabilities will transform the payment experience. Together, we will offer an attractive, simple and secure Pay-by-Bank solution that gives choice to our clients and their customers who use ACH as their payment mechanism. This is part of J.P. Morgan Payments’ vision to accept any payment, anytime, anywhere.”
“Billers and consumers both get greater payment choice,” says Chiro Aikat, executive vice president, Merchants & Acceptance, Mastercard North America, “but the partnership also propels payments innovation on two fronts — in the ease of the user experience and in the security of data sharing.”
“The technology behind Pay-by-Bank reduces the likelihood of unauthorized transactions and frees our clients from the need to retain — and the responsibility to securely maintain — consumer banking information,” Neukirchen says.
Pay-by-Bank also uses machine learning in Mastercard’s Smart Payment Decisioning Tools to analyze the best time to initiate the payment based on the bill payer’s historical transaction behavior and risk patterns, which protects the consumer and merchant by ensuring important payments get made and can reduce the risk of returns due to insufficient balance.