JP Morgan is teaming up with Mastercard on a service that uses open banking to let customers make payments using their bank account information instead of a card.
The Pay-by-Bank service offers ACH payments that use open banking so that customers can permission their financial data to be shared between trusted parties to let them pay bills directly from their bank account.
This means that customers do not need to type in routing and account numbers each time they need to pay a bill.
For billers and merchants, it automates consumer onboarding and reduces the risk and cost of storing bank account information. JP Morgan says the offering will be particularly beneficial for recurring payments.
Pay-by-Bank is currently being piloted with a few billers and merchants before an expansion next year.
In an internal memo seen by Finextra, Max Neukirchen, head, payments and commerce solutions, JP Morgan Payments states: “While Pay-by-Bank is not new to the industry, our collaboration with Mastercard, a long-time trusted partner, will make our approach differentiated.
“Our solution will offer a number of benefits. For our clients, it will minimise the risk of returns from an insufficient balance – through advanced analytics, we are creating a feature that will help clients determine the best time to initiate a payment. Plus, receiving consumer-permissioned bank data will reduce the likelihood of unauthorized transactions. For consumers, this offers another attractive payment option to choose from. “