Pay By Bank – The Revolution Changing the Face of Payments

By Delia Pedersoli, COO, MultiPay Global Solutions

In the ever-evolving landscape of retail, one trend stands out: the meteoric rise of alternative payment methods (APMs). In recent years, alternative payment methods (APMs) have surged in popularity, constituting nearly 5% of all UK transactions, according to the 2023 BRC Payments Survey.

Among these APMs, Pay By Bank is quickly emerging as a frontrunner, poised to revolutionise the entire payment experience. As consumers increasingly prioritise mobile payments and convenience, the attraction of Pay By Bank gains momentum, reshaping how we choose to shop and make transactions. Notably, UK Finance expects that remote banking payments processed via Faster Payments Service or cleared in-house are projected to rise to £5.7 billion by 2031, nearly doubling from current figures.

Requiring no additional downloads for the customer, Pay By Bank works by users simply selecting the option on the payment device at checkout to scan a uniquely generated QR code that automatically opens their mobile banking app to authorise the transaction. Once approved, funds instantly transfer from the customer’s bank account to the merchant.

A Win-Win For Customers And Merchants

With the rise of today’s ‘zero consumers’ – one that has zero boundaries between the channels they use to shop, zero loyalty to any particular brand and zero patience for bad service and experience – the ability for Pay By Bank to cater to these demands will only help retailers stand in good stead with shoppers. Without needing to go via a third-party app, shoppers can quickly and easy checkout in store by simply using their smartphone to bypass entering their card details or navigating cumbersome checkout procedures.

However, for the retailer, the advantages of Pay By Bank are even more compelling:

  • Significant cost savings – by removing interchange and scheme fees, retailers pay minimal transaction costs every time Pay By Bank is used compared to credit and debit cards. These savings can either be taken as additional profit, used to drive growth elsewhere in the business or improve other aspects of operations and customer experience.
  • Speed and accuracy – in today’s economy, it’s reassuring for retailers to have accurate and real-time visibility of revenue, with quicker access to reserves if its needed. With Pay By Bank, payments and refunds can flow seamlessly and almost simultaneously from the customer’s account to that of the retailer. With funds instantly transferred from the customer to the merchant, Pay By Bank also minimises exposure to fraud.
  • Boosting loyalty – according to McKinsey, the rate of brand switching among consumers doubled from one-third in 2020 to half in 2022, with approximately 90% saying they’ll continue to do so in the future. This spells trouble for retailers. However, the streamlined process of Pay By Bank not only helps foster positive brand perception – combatting the ‘zero consumer’ trend – but also enables retailers to enhance customer understanding by integrating data insights into loyalty programs. Additionally, by consolidating payments from both in-store and online transactions, retailers can discern specific customer behaviours and preferences to tailor promotions.

Clearly, Pay By Bank serves as a multifaceted solution that not only meets the immediate requirements of retailers today but also lays the groundwork for future advancements in retail payment experiences. Choosing to collaborate with a technology partner able to build tailored payment solutions that can seamlessly integrate with existing systems provides merchants with a strategic advantage. Not only does it eliminate the need for substantial investments in new hardware or devices but ensures they can remain receptive to ongoing innovations within this dynamic landscape.

Where Is Pay By Bank Already Seeing Traction?

The rapid adoption of instant payments schemes such as Pay By Bank is already well underway in many parts of the world. In Europe, Sweden’s Swish platform stands out as a clear trailblazer that boasts over 8 million users processing an average of 10.21 transactions per customer in May 2023. Initially launched in 2012 as a peer-to-peer (P2P) mobile payment solution, Swish has since evolved to incorporate business transactions (P2B) and has now firmly embedded itself within Swedish payment culture.

As is evident from its early adoption, Pay by Bank presents an exciting and compelling opportunity for retailers to both supercharge customer experience and profits. In the not-too-distant future, the ability to make payments with such ease will be expected as standard by consumers. Those retailers who don’t prepare now will likely lose out. Staying one step ahead, especially in today’s economic climate, must be a priority.


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