J.P. Morgan and Mastercard launch 'Pay-by-Bank' solution

This new solution 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 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 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.

How the payment solution works?

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. The two companies are piloting Pay-By-Bank with a small number of US-based billers and merchants in 2022 and expect to expand in 2023.

The bank’s officials stated that their aim is to stay at the forefront of payments innovation. They’re happy to work with Mastercard on this solution as their Open Banking capabilities will transform the payment experience. Together, they will offer a secure Pay-by-Bank solution that gives choice to their 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.

Mastercard’s officials explained that billers and consumers both get greater payment choice, 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 unauthorised transactions and frees clients from the need to retain, and the responsibility to securely maintain consumer banking information.

The technology behind Pay-by-Bank

Pay-by-Bank also uses machine learning in Mastercard’s Smart Payment Decisioning Tools to analyse the best time to initiate the payment based on the bill payer’s historical transaction behaviour 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.

Pay-by-Bank is yet another innovation in which Open Banking lets people and businesses across the globe safely share their data to access innovative experiences, from new ways to pay to secure and frictionless lending, bringing the promise of the digital economy to more people. Mastercard brought its payments expertise and experience into the world of account-based payments in 2017 with the acquisition of Vocalink. Since then, the company continued to focus on efforts that deliver greater choice and security in financial service experiences including investments in Open Banking like the acquisitions of Finicity and Aiia.