The news: Two major card issuers are enabling account-to-account (A2A) payment solutions.
Discover’s opportunity: The integration reduces Discover merchants’ reliance on card payments, which helps them save on interchange fees (the fees networks charge merchants to accept card payments). Those savings can be passed down to the customer in the form of discounts, which can help spur adoption and repeat purchases—leading to tighter merchant relationships for Discover.
Discover may be using the integration to improve its positioning as a payment provider: Increased use of the ACH network, which typically powers A2A transactions, for B2B payments and healthcare transactions is set to open a pathway to use it for retail payments. ACH volume grew 8.7% year over year in 2021.
Bank of America’s opportunity: Pay by Bank can make Bank of America a more attractive merchant solutions provider for retailers because it lets them offer more payment options. And like Discover, Bank of America’s offering also helps limit the amount in interchange fees that merchants pay.
Bank of America plans to bring Pay by Bank to additional markets, and the US could be soon considering the issuer’s large presence in the country. Expanding the solution globally can give Bank of America a stronger connection to open banking—a sector that fintechs like Plaid and Mastercard-owned Fincity are quickly gaining traction in. Transactions facilitated by open banking are expected to hit a value of $116 billion globally by 2026, according to Juniper Research.
Related content: Check out the Bank-to-Bank electronic transfers section of the “Payment Methods and Funding Mechanisms” report, which is part of our payments ecosystem report collection.
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