2024: The Year for Pay-by-Bank

PYMNTS eBook, Trustly

PYMNTS asked industry executives across the payments and digital commerce landscape to give us their take on the pivotal shifts, technological advancements and strategies that have shaped business in 2023. Their responses show critical trendlines to watch in the new year. Clark Dumas, head of merchant success at Trustly, says merchants looking to cut costs are turning to pay-by-bank options.


Tightened budgets have led many merchants to question certain expenses as “the cost of doing business.” With the money supply shrinking and corporate interest obligations increasing, B2C companies are increasingly exploring alternative payment methods to achieve efficiency and alleviate the rising cost of card processing.

As merchants vet APMs, many will seriously consider pay-by-bank as a viable option. The sentiment will be furthered by four other trends helping to garner popularity for pay-by-bank: the unending toll swipe fees have on merchant revenue; innovation in real-time payments and the continued excitement around the FedNow® Service; the desire for more value in payment processing; and an increasing interest in micropayments as a way to enhance subscription-based revenue models.

The Unending Problem of Swipe Fees: U.S. merchants paid $126.4 billion in credit card processing fees in 2022, a 20% increase from the previous year. The persistent connection between the profitability of incumbent banks and interchange-fee-generated revenue from card-based transactions suggests that swipe fees aren’t going away.

In 2024, more merchants will tighten their budgets and stop accepting swipe fees as the cost of doing business. Instead, they’ll build strategies to incentivize consumers to use pay-by-bank alternatives such as bonuses, discounts, charitable donations with every transaction and more. Consumers will become more comfortable with pay-by-bank options and open banking, creating a domino effect across industries.

Real-Time Payments and FedNow Adoption: The entrance of FedNow combined with the existing RTP Network® will enhance the value that pay-by-bank already brings to consumers: convenient access to fast funds. Combining the directness and simplicity of pay-by-bank with the immediacy of real-time rails is a natural integration for use cases like wallet funding, insurance claims, online gaming, sports betting and more.

Value-Wrapped Payments: Open banking solutions, including pay-by-bank, will excel in an era where merchants are looking to get more value out of their payments. Bank-grade data retrieved via open banking APIs allow merchants to couple value-added use cases like identity verification with payments, streamlining and personalizing the user experience.

Micropayments: Subscription-based revenue models are being threatened by inflation and supply chain disruption. More consumers are doing away with subscriptions to make room for more necessary expenses. Modern consumers could be empowered to control their media consumption and restore their purchasing power with micropayments. Instead of a monthly subscription fee, they could pay for one article or TV show. However, swipe fees make cards an unsustainable option for micropayments. To derive tangible economic benefits from micropayments, subscription merchants will need to consider a cost-cutting alternative with a streamlined UX, i.e., open banking powered pay-by-bank.

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