Trustly CPO: ‘Exciting Time’ For Pay by Bank and Open Banking

As payments continue to evolve, a trend to watch in 2025 is the adoption of pay-by-bank technology.

This burgeoning payment method, rooted in open banking, has the potential to reshape how consumers and merchants interact.

“It’s an exciting time to be in this space,” Trustly Chief Product Officer Adam D’arcy told PYMNTS.

Open banking has been around for years, gaining traction in regions like the United Kingdom and Hong Kong. The United States, however, has only recently begun to embrace its potential.

Pay by bank is poised to complement — rather than compete with — existing payment methods like digital wallets. D’arcy said he believes wallets such as Apple Pay and Google Pay could eventually incorporate pay-by-bank functionality, much like they’ve integrated buy now, pay later (BNPL) solutions.

“It’s still very nascent, particularly in the U.S.,” he said, citing the need for standardization and broader consumer education before such integrations become widespread.

Rule 1033 — a landmark regulation — will have a transformative impact by legitimizing open banking practices in the U.S. market, D’arcy said.

“It takes us out of a gray area,” he said, adding this regulatory clarity is driving interest from major merchants and financial institutions.

This adoption hinges on dual participation. Consumers and merchants need to engage. Consumer trust in technology giants like Apple could play a pivotal role in driving usage, D’arcy said, citing findings that U.S. consumers often trust Apple more than their banks — a telling sign of where the industry might head.

Implications of Open Banking’s Rise

The rise of pay by bank will inevitably reshape the relationships between banks, FinTechs and merchants. While large banks may find the cost of compliance manageable, smaller institutions could face challenges. Collaboration with third-party providers will be essential to navigate these hurdles and unlock new opportunities.

D’arcy said he is optimistic about the potential for industrywide cooperation.

“We’re already seeing successful applications of open banking,” he said.

With regulatory frameworks in place, stakeholders can make more confident bets on the future, fostering innovation and growth.

Another critical intersection for pay by bank is real-time payments. The U.S. has seen momentum with such payments, including The Clearing House’s decision to raise daily limits from $1 million to $10 million on its RTP® network. While real-time payments offer faster settlement and higher limits, D’arcy cautioned against expecting immediate mass adoption for consumer use cases.

Fraud remains a pressing concern. Unlike traditional methods, real-time payments are irreversible, making them attractive to scammers. D’arcy pointed to measures in other markets, such as centralized anti-fraud systems in Hong Kong, that could serve as models for addressing this issue.

Merchant Adoption Is Key to Success

For pay by bank to succeed, merchant adoption will be critical, D’arcy said. Trustly’s enterprise-first approach has already demonstrated value in industries like telecommunications and gaming. By reducing payment costs and streamlining processes, the company has saved merchants millions. However, success requires more than technology. It demands strategic partnerships.

“You can’t just plug us in and expect it to work,” he said.

Merchants need tailored strategies, including data-driven segmentation and A/B testing to steer consumers away from credit cards. The gaming industry, for example, has benefited from Trustly’s solutions, solving regulatory challenges and facilitating seamless deposits for legal online gaming activities, he said.

Retail, particularly everyday spending categories like groceries and fuel, is also ripe for innovation. By using data and incentives, merchants can drive loyalty while reducing costs. Flexibility is important, D’arcy said, noting that each use case requires a bespoke approach.

AI Broadens Opportunities

Artificial intelligence is already playing a critical role in fraud detection within the ecosystem, he said. Machine learning models analyze transaction data to identify and prevent fraudulent activities, offering merchants a guaranteed model for secure payments. But the future of AI in open banking extends beyond fraud.

D’arcy said he envisions AI-powered financial assistants that operate locally on devices, ensuring privacy while providing personalized insights. These tools could simplify complex financial concepts for consumers, making services like cash flow management more accessible.

“The possibilities are endless,” he said, hinting at a future where AI becomes a trusted advisor for everyday financial decisions.

As 2025 approaches, the pay-by-bank landscape is poised for transformation. With regulatory clarity, technological advancements and growing merchant interest, the stage is set for rapid adoption. However, success will depend on the industry’s ability to address challenges like fraud, standardization and consumer education.

For D’arcy and Trustly, the focus remains on delivering value through partnerships and innovation.

“The limit is what can be imagined,” D’arcy said.