Zilch Turns to Plaid to Power Open Banking Repayments

Consumer payments platform Zilch has launched an open banking partnership with Plaid.

The collaboration, announced Tuesday (Oct. 21) is designed to integrate open banking into Zilch’s repayment system as the company looks to offer more flexible ways to pay.

“Integrating with Plaid is an important step that allows us to continue to deliver on this, enabling flexible, low-cost repayment options at scale, all while simplifying the experience behind the scenes,” Joe Zender, Zilch’s chief product officer, said in a news release.

According to the release, Zilch customers will now be able to use pay by bank for one one-off repayments, letting them repay directly from their bank account with a few taps. Zilch is also using Plaid’s Virtual Account capabilities to bolster its payment operations with things like “improved settlement tracking and built-in refund functionality,” the release added.

The company notes that this is happening at a time when nearly one in three UK adults — some 15 million people — are using open banking. In July of this year, open banking services were used a record 2.04 billion times, up 3.5% from the prior month.

Meanwhile, consumers in America are not shunning open banking so much as they are unaware of it.

“The simple knowledge gap, more than cost or convenience, may be the reason open banking payments have yet to catch on in the U.S.,” PYMNTS wrote last month, citing PYMNTS Intelligence research showing that 56% of consumers had not heard of pay by bank.

“The figure dwarfs every other reason consumers cite for not trying the service, including worries about entering banking information online or a preference for debit cards.”

The data finds that pay by bank, typically described as a direct-from-account alternative to card payments, is “a solution waiting for a problem.” Consumers have demonstrated that they can be swayed by discounts, loyalty benefits and cash back offers. Still, those incentives don’t matter if half the market has no idea that the option is on the table.

The report lumps consumers into four personas, the majority of which — 53% fall into the category of “resistant.” Rounding out the group are those who are “intrigued” (22%), “interested” (18%) and “early adopters” (6%).

“Resistance often stems from indifference rather than hostility. When incentives are introduced, attitudes shift,” PYMNTS added. “Among those who initially say they have no interest in pay by bank, about two-thirds soften once discounts or rewards are in play.”