Government should encourage real-time-payments. In 2021, merchants were charged $77.5 billion in credit card fees, which are split between issuing banks and the card networks. In March, Visa and Mastercard were preparing to raise interchange fees even further. The Clearing House’s real-time-payments network is also used by Venmo and Zelle to facilitate money transfer. TargetTGT Red Debit card, for example, works by transferring customer funds directly from their bank account to Target’s. In return for using the product, Red Card customers receive up to 5% cash back on their purchases. Plaid, an MX competitor and one of the most valuable private fintech companies in America, does not currently offer a pay-by-bank service or utilize the RTP network. Financial services consulting firm Sionic has partnered with MX, a company that connects fintechs to users’ bank accounts, and Google Cloud Services to launch pay by bank in the United States. The product lets merchants cut out card acceptance fees, which range from 1% to 3%. Its success in the U.S. depends on whether merchants can incentivize consumers to switch from heavily utilized credit or debit cards. Customers use Sionic’s pay-by-bank option, called ULink, by scanning a QR code at checkout. The option could also appear to consumers as a button within their mobile banking apps. For security, the technology “tokenizes” user account information. “The merchant never sees the account number for the individual that's paying because they didn't present a debit card, they presented a token to the merchant. https://www.forbes.com/sites/emilymason/2022/08/26/new-payment-service-using-same-tech-as-zelle-and-venmo-will-cut-out-visa-and-mastercard-fees/
No fraud protection iirc. Pass
Merchants who want customers to use pay by bank will want to handle disputes swiftly, similarly to how Amazon has built customer loyalty through generous refund policies. Merchants eager to accept pay by bank could incentivize consumers to switch over by offering rewards or discounts for using the service. Some merchants are ahead of the curve, offering their own card programs similar to pay by bank. The Target Red Debit card, for example, works by transferring customer funds directly from their bank account to Target’s. In return for using the product, Red Card customers receive up to 5% cash back on their purchases. In addition to avoiding interchange fees, the Red Card gives Target greater control over the customer experience and more access to offer new promotions or products.
Hard pass from me until there is rock-solid fraud protection. I feel much more comfortable spending another bank's money (Amex) than I do spending my own via a debit card.
It will take years to build the trust visa and mc have. The economy is also going down the gutter so idk which merchant will switch
When you start adding up all the ACH and RTP upsells, is it still cheaper than a regulated debit transaction?
The similar real time payment model is successful in India (It’s called UPI) and widely used by street vendors.