“It’s not about killing cards,” says founder of payments startup Banked, which is looking to ramp up pay-by-bank in US

Banked has inked a deal with US financial tech firm FIS aimed at driving new pay-by-bank offerings for consumers and businesses in the US.
“It’s not about killing cards,”  says founder of  payments startup Banked, which is looking to ramp up pay-by-bank in US

“It’s not about killing cards,” says Brad Goodall, the founder of London-founded online payments startup Banked, which has just struck a partnership with US financial tech firm FIS, which he hopes will herald a surge in pay-by-bank payments in the US.

The collaboration is aimed at driving new pay-by-bank offerings for consumers and businesses in the US, says Banked, which is backed by Bank of America.

Advocates of pay-by-bank say it simplifies payments, as businesses and consumers can make payments directly between businesses and consumer bank accounts without the need for card details, account numbers or sort codes.

Businesses benefit from less fraud, reduced friction, faster settlements and lower processing fees, while consumers benefit from a smoother payment experience, easier verification and faster access to funds, Banked argues.

While cards dominate in-store and online, Goodall is optimistic that pay-by-bank can snatch significant market share, pointing to its advantages compared to existing payment methods in the US, such as cheques.

Australian expat Goodall says:

“One of the big opportunities is in the US they obviously have cheques. Cheques are still a big form of payment, and account-to-account can digitise that process.

“If you think about an insurance claim or a refund,  a customer being offered a cheque can take five days to cut the cheque, ten days to send it, so by the time they have it in their hand it can take anywhere up to 20 days.”

Pay-by-bank can sort the payment out in real time or within a day.

Another reason for the current excitement around pay-by-bank in the US is it represents a pull for merchants, says Goodall.

Goodall says:

“You have a significantly higher component of interchange in the US, that does mean there is some pressure around merchants looking for solutions that are going save as much costs as they can, especially with things like the cost of living and inflation.”

He says pay-by-bank can establish itself in the payment ecosystem, garnering significant market share.

Goodall says:

“Pay-by-bank is not about killing cards or anything like that, it’s really about offering more choice.

“So there will be some flow that will come from cards, there will be some flow that comes from cheques, there will be flow that comes from digitising manual bank transfers.

“I think it is really about developing solutions where pay-by-bank can play well with card.

“There will be some people who want pay- by-bank, there will be some that will always be credit card.

“I think that capability to be able to offboard onto a card payment or present a new payment method, that is how you are going to get pay-by-bank to grow, rather than trying to say 'it's about killing cards'."

Goodall pointed to retailers incentivising customers with cash back or loyalty points, offering an “intimate” customer experience, with inducements coming via funds that would have gone on interchange charges.

One challenge holding pay-by-bank, also known as account-to-account payments, back is a lack of public awareness, according to one report.

The report called “Tracking the digital payments takeover”, was published by PYMNTS Intelligence and AWS.

The report said: “A key factor contributing to the sluggish adoption is a significant knowledge gap among consumers.

“More than half of the respondents acknowledged abstaining from A2A options solely due to their lack of understanding.”

Lead image: Banked CEO Brad Goodall. Photo: Uncredited.

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