Early Pay-by-Bank Adopters Poised to Win With Gen Z and Millennials

Younger consumers are much more open to trying new payment methods, and payments players must be prepared to offer them the spear-tip mechanisms they crave.

These digital-first generations, like Gen Z and millennials, prioritize convenience, speed and security in their payment choice. As merchants look to navigate an increasingly complex payments landscape, a new contender is emerging that promises not only cost savings but also enhanced customer experiences: pay by bank.

Against a backdrop where these consumers’ comfort with digital banking and FinTech apps is creating fertile ground for the widespread adoption of pay-by-bank solutions, PYMNTS sat down with Christina Potter, head of eCommerce at Trustly, and Vivian Chang, vice president of eCommerce at GNC, to discuss the technology.

“What we’re seeing — and I think what everyone’s seeing — is more interest around pay by bank as a way to accept payments,” Trustly’s Potter said. “It’s obvious that it’s a lower-cost payment method utilizing ACH rails. But there’s more to it than just that.”

For merchants, pay by bank offers a compelling financial case. According to Potter, merchants can save up to 50% of the costs associated with debit card transactions by adopting this payment method. These savings, in turn, can be reinvested into loyalty programs, driving higher average transaction values (ATVs) and improving customer retention.

The process is simple: Consumers log into their bank accounts, eliminating the need to input 16-digit credit card numbers or worry about card expiration dates and lost or stolen cards.

“Most Americans have had their bank account for 17 years or more,” Potter said. “It’s truly an opportunity to simply log into your bank account … and now with OnlineAuth, you can use your app and biometrics to log in.”

The Growing Appeal of Pay by Bank

Pay-by-bank technology, which allows consumers to make purchases directly from their bank accounts, is gaining traction among retailers looking to streamline payments, boost customer loyalty and improve margins.

This frictionless experience is a significant draw for merchants aiming to reduce cart abandonment — a critical metric for eCommerce success.

GNC’s Chang emphasized the importance of a smooth payment process in converting potential sales. “At the end of the day for eCommerce, I am most concerned about what is that end-user consumer experience,” she said. “If you get consumer experience right, then it naturally opens up the path to both acquire and retain [customers].”

“I think what I get really excited about when you think about adoption is really that younger consumer,” Chang added. “Everything that I’ve seen — and it plays out in our data [at GNC] as well — is that this is the demographic that is most willing to go try something new.”

Potter agreed, noting that pay by bank is particularly attractive to “credit diverse” individuals and those accustomed to a digital-first experience.

“As we start to see the flywheel spinning, especially in the eCommerce and retail space, I think you’re just going to get more and more consumers expecting to see that pay-by-bank option,” she said.

While pay by bank offers numerous benefits, consumer adoption is not yet universal. However, incentives can make a difference, with offering targeted rewards and integrating incentives into loyalty programs a potential way to accelerate adoption.

“We’ve seen studies where pay by bank actually jumps up to 81% with incentives versus 47% without incentives,” Potter said. “I think merchants need to not just look at it as like, ‘Oh, I’m paying an incentive for this plan,’ but I’m actually able to then utilize all the future cost savings … to drive back into a loyalty program.”

Operational and Security Advantages and the Road Ahead

Beyond the cost and user experience benefits, pay by bank also offers operational and security advantages. The method allows consumers to make payments directly from checking or savings accounts, broadening payment flexibility. Additionally, merchants can pre-populate shipping and billing information, further reducing friction at checkout.

“It’s a set-it-and-forget-it option,” said Potter. “Once they log in once, they don’t have to keep changing that information if the expiration date comes up or the card is lost and stolen.”

For retailers like GNC, which offers subscription-based services, this seamless payment method is a game-changer.

“We do have consumers who are on subscription programs as well. It’s not just like you are buying once and then they, you leave us. The question is, how do we make it easier every single time that they visit?” Chang said.

For merchants considering whether to integrate pay by bank into their payment strategies, the initial setup may seem daunting. However, the long-term ROI can be substantial. As pay by bank continues to gain momentum, merchants who adopt early may gain a competitive edge — not only by reducing costs but by creating frictionless, loyalty-boosting experiences that keep customers coming back.

“Whatever that initial incurrence of that integration, when you look at the ROI in terms of cost savings, it really feeds into itself,” Potter said.

Chang echoed this sentiment, emphasizing the need to offer consumers diverse payment options to capture a broad audience. “We just want to offer lots of options to consumers,” she said. “We are seeing good adoption right now.”

“Now’s the time. You don’t want to be a lagger in this space,” Potter concluded. “I think you want to be part of the start so that you’re prepared and ready to go as your consumers start to expect this.”