JPMorgan Chase (NYSE:JPM) has introduced a new Mastercard-powered pay-by-bank tool, a move that comes amid growing interest in open banking solutions in the U.S. The tool, which integrates open banking technology and Automated Clearing House (ACH) capabilities, offers an alternative payment method for merchants. The launch was announced today.
Mastercard (NYSE:MA), with a market cap of 361.98B USD according to InvestingPro data, is a prominent player in the Financial Services industry and has been consistently increasing earnings per share, as per InvestingPro Tips. This new tool leverages the strength of Mastercard’s Smart Payment Decisioning Tools, which assist billers in optimizing payment initiation based on transaction behavior and risk patterns.
Verizon (NYSE:VZ) is set to pilot this new tool, aligning with the telecom giant's commitment to offering diverse and convenient payment options, as stated by Darrell Conn from Verizon. The pay-by-bank solution operates as a direct-debit method allowing customers to authorize their bank details for recurring bill payments. This approach eliminates swipe fees for merchants, making it cost-effective.
Max Neukirchen, head of J.P. Morgan's payments and commerce solutions, emphasized the tool's capacity to facilitate secure bank payments. The solution has attracted interest from a wide base of U.S. biller clients. It employs Mastercard’s Smart Payment Decisioning Tools, which assist billers in optimizing payment initiation based on transaction behavior and risk patterns. Additionally, it uses consumer authentication protocols for secure payments towards rent, utilities, tuition, insurance, and healthcare.
The pay-by-bank method is increasingly popular in the U.S., with merchants aspiring to cut payment processing costs by up to 80%. High credit card interest rates are pushing consumers towards debit transactions and pay-by-bank checkout options. Mastercard, which has raised its dividend for 12 consecutive years according to InvestingPro Tips, is well-positioned to benefit from this trend.
Elisa Tavilla from Javelin Strategy & Research pointed out the surge in interest in open-banking solutions in the U.S., propelled by regulatory changes like the Consumer Financial Protection Bureau’s proposed Personal Financial Data Rights rule, potential debit fee cap reduction by the Federal Reserve, and possible credit card fee regulation.
Companies like AT&T, T-Mobile, and Verizon are promoting autopay with lower-cost debit cards and ACH payments while enabling instant bill payments via Real-Time Payments (RTP) and Citi. This trend is fostering the adoption of real-time payments, which could further boost pay-by-bank solutions and open new revenue opportunities.
Link Money CEO Eric Shoykhet highlighted the offering-driven approach of open banking and the vital role of infrastructure providers in its promotion. For more insights like this, there are 17 additional tips available on Mastercard at InvestingPro.
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