Amid competition from fintech firms, Bank of America – one of the largest credit card issuers in the U.S. – is introducing a new way to pay for things.
The company is rolling out its new online payment solution called "Pay by Bank." The new feature allows consumers who are making online purchases to pay directly from their bank accounts instead of using a credit card or debit card.
The company says Pay by Bank transactions are based on the concept of “open banking.” They take place in real-time and require no credit card or debit card details. Bank of America says this makes online checkout simpler, faster, and more secure.
Bank of America seems to have a pretty good reputation among consumers for its security. Hector, of Las Vegas, told us he’s pleased with how Bank of America handles the security of his credit card account.
“Card controls are excellent because you can stop any online or atm activity anytime,” Hector wrote in a ConsumerAffairs review. “I feel my account is safe. You can only access account info from your own device.”
No storage of customer data
Bank of America says Pay by Bank is even safer than payment card transactions because there is almost no storage of customer data. Because a card is not required and it is an online “account to account” payment, companies do not need to obtain and store customer card data.
The system leverages the customer's bank authentication network for added security. And as a bonus for consumers, the transaction does not levy a card processing fee.
The system is rolling out first in the U.K., but it will be available in the U.S. in the months ahead. Once it is fully implemented, many e-commerce merchants will offer Pay by Bank at checkout. After selecting that option, the customer authenticates the payment by using their existing login credentials through their online banking platform.
Once authenticated, the payment is sent directly from the customer's bank to the company's account. The customer is returned to the checkout page and the transaction is complete.
"The launch of Pay by Bank is part of our continuous cycle of technology investment that helps us to keep clients at the cutting edge," said Matthew Davies, co-head of Global Corporate GTS Sales and head of GTS EMEA at Bank of America.
Davies predicts that Pay by Bank will make online shopping easier and more secure for consumers while helping merchants set themselves apart from their competitors.