BNY Mellon has announced a strategic partnership with Trustly, a pioneer in open banking, to launch a new payment solution called Bankify, according to a recent press release. This innovative platform leverages the strengths of both companies to facilitate direct bank account payments for consumers, offering an alternative to traditional payment methods like credit and debit cards or third-party payment platforms.
Bankify is designed to cater to a wide range of consumer-to-business payment flows, including merchant payments, bill payments, and digital wallet funding. The platform guarantees funds for business receivables, providing a seamless user experience and ensuring secure transactions.
This alliance aligns with increasing prevalence of open banking and pay by bank.
Open banking allows customers to share their financial information securely and electronically with other authorized organizations, such as fintech companies, payment providers, and other banks. As we have covered in PaymentsJournal, open banking evangelists argue that open banking provides greater transparency and data control for account holders, and allow for increased competition and innovation in the financial sector.
The Pay by Bank trend is also gaining momentum in the banking world. This method allows consumers to make payments directly from their bank accounts, bypassing traditional payment systems.
According to Sophia Gonzalez, Research Analyst at Javelin Strategy & Research, the big winners of Pay by Bank are merchants, because they don’t have to pay interchange or transaction fees to credit card companies. But customers could benefit too if merchants pass some of those savings on by reducing prices.
Pay by Bank is not as common in the U.S. as it is in other countries. One reason is that the U.S. has a well-established credit card system, which has been the preferred payment method for many consumers for decades. Credit cards offer rewards, cashback, and other incentives that make them an attractive option for many people.
Another reason is that the U.S. has a fragmented banking system, with thousands of banks and credit unions operating independently. This makes it more challenging to implement a standardized Pay by Bank system across the entire country. However, Pay by Bank seems to be gaining ground slowly but surely in the U.S., and BNY Mellon is betting that trend will continue.
