Things are clearly heating up. And that’s not just a commentary on the temperature as we move into summer. Economic indicators are on the rise as consumer spending picks up across most sectors. This is a welcome sign of momentum for nearly every business, particularly consumer-facing ones.
Many of the changes adopted this past year have modified the way people shop today. The preference for contactless payments continues to grow with 37 percent of consumers indicating they’re more likely to shop in a touchless environment. When looked at generationally, 70 percent of millennials state an inclination for touchless transactions.2
These trends coincide with a decline in the use of cash at the point-of-sale. Recent market research shows that younger consumers are also shifting away from credit cards, preferring to use debit cards and new payment methods such as social payments, Buy Now Pay Later (BNPL), QR codes or digital wallets.
While consumer demand for faster, more efficient, friction-less payments continue to grow, merchants are increasingly focusing on alternative payment options that can improve consumer engagement and fit within new loyalty strategies, while reducing fraud and cutting costs. Pay by Bank Account is one such solution that is proving to be a popular payment option with an expanding segment of merchants and consumers alike.
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Pay by Bank Account offers convenience and cost savings
The Pay by Bank Account payment option allows consumers to use their banking credentials to quickly enroll and pay for one-time or recurring purchases. This payment form is an alternative to card-on-file and offers up to 30% average saving versus interchange.2 This payment option is unaffiliated with card networks, which leads to cost savings, improved convenience and increased control for the retailer. Pay by Bank Account also offers a guarantee of funds and helps reduce chargebacks.
Pay by Bank Account enables linking a consumer’s bank account on file to a payment token stored within a merchant’s digital wallet enabling risk managed payments via Automated Clearing House (ACH) network.
Offering a Pay by Bank Account option makes good sense for merchants because 94 percent of U.S. consumers already have a checking account. And 20 million of those consumers have checking accounts, but no credit card, which presents an opportunity to reach this segment of customers who may be averse to making purchases using credit. In fact, 54 percent of non-cash payments in this country today are made from checking accounts, which means consumers are quite comfortable with this type of payment.3
While Pay by Bank Account has been around for a while, new technology innovations have transformed this payment type into a very consumer/merchant friendly option.
Linking via online banking enables low-friction enrollment
Pay by Bank Account solutions use modern SDK’s and API’s to deliver prebuilt UI’s that enable customers to quickly and easily enroll using an online bank login experience to more securely link their bank information on file and provision to a payment token back to the merchant in as little as 60 seconds. There is no need for the consumer to manually enter their routing and account information, which in the past might have been an impediment to enrollment. After the one-time, low-friction enrollment process, customers can easily execute transactions that are processed via the ACH network.
For consumers, Pay by Bank Account has some important advantages, such as credentials do not expire, and no CVV or 2FA code is required to complete transactions. Also, this payment form typically offers higher approval rates than card-on-file options. There are also significant benefits for merchants. Since Pay by Bank Account solutions are ACH transactions, they don’t require interchange fees, which reduces the cost of each transaction. Statistics have shown that Pay by Bank Account also has lower abandonment and decline rates within ecommerce environments.3
Increase Customer Loyalty
A Pay by Bank Account solution can be merchant branded and offered as part of an anytime, anywhere, any payment, omni-channel consumer experience, which serves to strengthen customer loyalty. Merchant reward and loyalty programs can be used to motivate and sway consumer adoption. And because Pay by Bank Account is secured via industry standard encryption protocols, is a vaulted and tokenized solution, sensitive personally identifiable information (PII) and payment information is never exposed nor stored on customer mobile devices or on the merchant’s servers, delivering critically important security and compliance advantages.
Pay by Bank Account is increasingly being embraced by consumers for payment in-store, in-app, or online for one-time or reoccurring purchases, making this another important payment option that merchants should strongly consider.
Real-world success story
For one major national grocery chain, Pay by Bank Account has proven to be a highly successful payment option. Of particular note, the merchant found that customers who use Pay by Bank Account were extremely loyal, rarely shopping anywhere else. In addition, the average ticket size was approximately 60% higher than when other payment methods were used.4
With IT budgets often constrained, one of the biggest challenges merchants face is system integration. This is where a trusted partner can make a world of difference. Fiserv’s Systems Integration Services (SIS) offers a one-stop-shop for merchants, helping to accelerate and simplify their digital journey, allowing them to bring solutions such as Pay by Bank Account to market faster. SIS’s technical expertise and industry knowledge are key to delivering a seamless, end-to-end experience for the merchant and their customers. SIS brings last-mile connectivity that effortlessly plugs into the business’s ecosystem, with no additional requirements from the merchant.
Of course, simply overcoming integration hurdles is not enough on its own. Driving adoption is key to the success of any new payment option. Fiserv is able to help here as well. Fiserv’s Output Solutions provides comprehensive marketing services to facilitate consumer awareness and engagement. Output Solutions creates, designs and distributes targeted marketing collateral online, in-store or through the mail. Relying on advance data analytics, Output Solutions is able to hone in on specific geographic areas and leverage key demographic information to craft the right message, delivered to the right person at the right time.
When properly marketed, Pay by Bank Account solutions can be a potent addition to any merchant’s payment options. And in today’s rapidly evolving retail marketplace, it’s important to offer solutions that save time, money, and improve the overall customer experience.
To learn more about this solution, connect with our sales team or visit our Pay by Bank Account solutions page.
