Pay-by-bank is back in the news cycle today– this time in the United States. Fintech infrastructure player Plaid unveiled a pay-by-bank tool for billpay.
The new tool, which is powered by Plaid’s network, provides businesses with a lower cost, more secure option for consumers to pay bills directly from their bank account with less friction. Because it leverages Plaid’s bank network, the new pay-by-bank tool does not require consumers to find their checkbook, manually enter their account and routing numbers, and wait for verification. Instead, the solution, which is embedded into a biller’s existing payments flow, connects to consumers’ accounts by securely entering their bank login credentials.
“Plaid provides both market-leading authentication through online banking and traditional account and routing number validation in the background,” the company explained in a blog post. “There’s no need to stitch together multiple vendors, so no matter how the user prefers to pay with their bank account, Plaid’s end-to-end Pay by Bank solution can securely accept it. Plaid Pay by Bank is available across all channels: online, in-app, in-store, and hosted contact center solutions.”
Plaid’s pay-by-bank is available as an all-in-one solution that includes processing, or it can be integrated with a biller’s existing payment processor such as Adyen, Nuvei, Checkout, and others.
Pay-by-bank offers two major benefits to billers. The first is cost savings. Plaid estimates that payments made directly from the consumer’s bank account offer a 40% lower processing cost when compared to credit card payments. The second benefit is lower risk. Plaid’s risk assessment results in fewer returns for recurring payments.
To decrease the risk of returned payments, Plaid leverages Signal, its risk engine that uses machine-learning-driven network insights that mitigate failed payments, connecting to closed accounts, or accounts with insufficient funds. Signal offers a feature called Smart Retries that provides guidance on when to retry failed payments. Plaid reports that this decreases non-sufficient funds (NSFs) on first payments by up to 80%.
Plaid’s pay-by-bank tool is already in use with a handful of customers across telecommunications, property management, insurance, automotive, and other industries. One such company, a digital rent payment business Domuso, has integrated Plaid’s new bill pay experience into its existing payments platform.
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Conclusion:
The launch of Plaid’s pay-by-bank tool for bill payments marks a significant advancement in the realm of fintech. By offering businesses a cost-effective and secure option for consumers to pay bills directly from their bank accounts, Plaid is streamlining the payment process and reducing friction for both billers and consumers. With the integration of the risk engine Signal to mitigate failed payments, Plaid is further enhancing the reliability of its pay-by-bank solution.
Already being used across various industries, including telecommunications and property management, Plaid’s pay-by-bank tool is making waves with its seamless integration with existing payment processors, providing a versatile solution for businesses of all types. As the adoption of this innovative tool grows, we can expect to see a positive impact on cost savings and reduced risk for billers, ultimately leading to a more efficient and secure bill payment experience for consumers.
