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Benefits and potential challenges of Pay-by-Bank for consumers and businesses

In an attempt to gain the favour and loyalty of customers, businesses are coming up with more and more new solutions. Among the fruits of these efforts is Pay-by-Bank – an innovative alternative to traditional payment methods. This technology, which promises speed, security and convenience, has already gained a lot of popularity.

However, like any innovation, Pay-by-Bank raises concerns and doubts among some consumers. So, in this article, we will weigh its advantages against potential drawbacks for both consumers and businesses.

What is Pay-by-Bank?

The Pay-by-Bank method exists within the context of open banking. It allows consumers to make payments directly from their bank accounts using third-party services or platforms. This eliminates the need to enter personal data, simplifying the payment process and protecting payers.

The payment process itself also takes much less time, because once the payer confirms the transaction, the funds are immediately transferred from their bank account to the merchant’s account, bypassing traditional payment processing systems.Benefits and potential challenges of Pay-by-Bank for consumers and businesses

Benefits of Pay-by-Bank

It is clear from the very explanation of the Pay-by-Bank concept that this method allows significant optimisation of online payments. However, let’s take a closer look at the full spectrum of advantages that this method brings for users and merchants.

Benefits of Pay-by-Bank for merchants

  1. Lower transaction costs: Businesses face lower fees with Pay-by-Bank compared to credit card processing charges. This cost efficiency can significantly impact a company’s profit.
  2. Increased efficiency: The direct nature of Pay-by-Bank transactions allows for increased conversion rates, lowering customer attraction costs.
  3. Enhanced customer trust: Offering a secure and efficient payment option strengthens a business’s reputation, fostering trust and loyalty among its customers.

Benefits of Pay-by-Bank for consumers

  1. Direct and faster transactions: One of the standout benefits of Pay-by-Bank is the speed of transactions. Payments are processed immediately, offering convenience that traditional methods can’t match.
  2. Enhanced security: With Pay-by-Bank, the need to share sensitive financial information is minimised, reducing the risk of fraud. This system also uses advanced encryption and authentication measures, offering better data protection.
  3. Reduced fees: Consumers also benefit from lower transaction fees. Unlike credit card payments, which can include various charges, Pay-by-Bank transactions are typically less costly, making them an attractive option for payers.

Potential challenges of Pay-by-Bank

Despite the above benefits, some consumers still hesitate to pay directly from their bank accounts. Research by PYMNTS Intelligence shows that 84% of users are very satisfied with their most used Pay-by-Bank. However, 24% were unaware of such payment method existing.

It is this unfamiliarity that stops people from using Pay-by-Bank. Without knowing the workings of this method, people worry about the security of their accounts.

However, this disadvantage can be easily overcome by educating users about the features of new technologies and their benefits.

Payop’s Pay-by-Bank

Realising the potential and benefits of open banking for our merchants, we have developed our own Pay-by-Bank solution. It’s available for integration to all businesses regardless of industry because we believe everyone should have access to simple and efficient payments. In addition, it is cheaper than classic card methods, has a higher conversion rate and has no risk of chargebacks.

To learn more about its advantages for your business, contact our team at [email protected].

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