Pay by Bank via Open Banking is a new payment method responding to today’s digital needs for customers to pay for goods or services online. By using Open Banking, customers don’t need to disclose their banking information – instead, at the checkout stage, they connect to their mobile banking app or their bank website and send funds directly from their bank account to the merchant’s bank account, without keying in personal financial data.
There’s no need to use a credit card or a debit card as all information is safely secured and transferred via API software (Application Programming Interface). As the consumer doesn’t have to key in their information, the system avoids the risk of fraud and allows for instant and easy transactions, refunds, recurring payments, instalment payments and simple reconciliation.
When the consumer reaches the checkout page, instead of keying in their card details, they are offered the option of Pay by Bank to initiate the payment. Upon doing so, the consumer selects their bank from a list, and is then prompted to open up their mobile banking app or banking web page to authenticate and approve the transaction.
Once approved, the customer is redirected back to the checkout page without any need to key in any data. The transaction occurs in real time and funds are instantly transferred from the consumer’s bank account to the merchant’s bank account, with instant notification/confirmation.
This method of payment is becoming more widely used and removes the need to key in pertinent information that could be stolen by cyber criminals and used for fraudulent purposes. It’s also quicker and easier, occurs in real time, has dramatically reduced transaction fees attached to it and allows for faster refunds. There are numerous benefits for merchants too, including receipt of funds in real time, less manual administration, low transaction fees and the customer enjoys a smoother payment journey at the checkout stage.