Nearly 40% of Consumers Use Pay by Bank for Retail Purchases
Account-to-account (A2A) payments, which involve transferring money between bank accounts, are increasingly popular among consumers. This trend is primarily driven by the rise of open banking, enabling individuals to make secure payments directly from their bank accounts.
According to PYMNTS Intelligence data, a research study conducted by Amazon Web Services and PYMNTS Intelligence, nearly 21% of consumers have made A2A payments for online retail purchases in the last three months. Additionally, nearly 18% have used pay-by-bank transactions for in-store retail shopping. When both online and in-store transactions are combined, almost 39% of consumers have embraced A2A payments for their retail purchases. Furthermore, a significant portion of consumers are also using this payment method for grocery items.
The PYMNTS study titled Tracking the Digital Payments Takeover: Consumer Familiarity Controls Account-to-Account Payment Growth provides valuable insights into the appeal of A2A payments in various scenarios such as making purchases, settling accounts, and paying bills. Among consumer goods purchases, grocery items are the most popular category for A2A payments, excluding person-to-person transfers and self-transfers.
The acceptance of pay-by-bank options plays a crucial role in encouraging consumers to consider new payment methods. According to the study, PayPal is currently the most widely used platform for A2A payments across different generations, with approximately 42% of U.S. consumers utilizing it. Venmo and Cash App follow closely behind, with 30% of consumers opting for these platforms.
In a move to further expand the availability of A2A payments, JPMorgan Chase recently launched its Pay-by-Bank tool in partnership with Mastercard. By combining Mastercard’s open banking technology with J.P. Morgan Payments’ ACH capabilities, this tool allows merchants to offer customers the convenience of paying directly from their bank accounts.
While the convenience and ease of platforms like Pay-by-Bank are enticing, one major obstacle to widespread adoption is the lack of awareness and education. The PYMNTS research reveals that over one-third of consumers do not fully understand how A2A payments work. Implementing awareness campaigns along with incentives such as discounts, rewards, or exclusive offers could help bridge this knowledge gap and drive adoption across different generations. Merchants, on the other hand, have the incentive to adopt A2A payments to reduce transaction costs by bypassing interchange fees.
It is important to ensure that consumers have a clear understanding of A2A payments and the benefits they offer. By raising awareness and simplifying the payment process, more individuals can leverage the advantages of this digital payment method.
In conclusion, nearly 40% of consumers are using pay-by-bank transactions for their retail purchases. The growing adoption of A2A payments is powered by open banking, and PayPal remains the leading platform in this space. However, educational efforts and incentives are necessary to overcome the knowledge gap and increase adoption rates. With advancements in technology and increased awareness, A2A payments have the potential to revolutionize the retail payment landscape.
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