JP Morgan is partnering with Mastercard on a service that uses open banking to allow customers to make payments using their bank account information instead of a card.
The Pay-by-Bank service offers ACH payments that use open banking so customers can authorize the sharing of their financial data between trusted parties to enable them to pay their bills directly from their bank account.
This means that customers do not need to enter routing and account numbers each time they need to pay an invoice.
For billers and merchants, it automates consumer onboarding and reduces the risk and cost of storing bank account information. JP Morgan says the offer will be particularly beneficial for recurring payments.
Pay-by-Bank is currently being tested with a few billers and merchants before an expansion next year.
In an internal memo seen by Finextra, Max Neukirchen, Head of Payments and Commerce Solutions, JP Morgan Payments said: “While payment by bank is not new to the industry, our collaboration with Mastercard, a trusted partner of long-standing, differentiating our approach.
“Our solution will provide a number of benefits. For our customers, it will minimize the risk of returning an insufficient balance – through advanced analytics, we are building functionality that will help customers determine the best time to initiate a payment “Additionally, receiving banking data authorized by consumers will reduce the likelihood of unauthorized transactions. For consumers, this provides another attractive payment option to choose from.”