What is Pay By Bank?

There are more ways to pay for goods and services than ever, but one particular method is reshaping modern transactions. 

Pay by bank is a trending payment method that allows consumers to pay directly with their bank accounts—no cards or cash required!

In the world of open banking, these transactions are emerging as a preferred payment option for shoppers who crave convenience in store or at the checkout page online. 
In this post, learn the details of pay by bank, its impact on modern businesses, and notable benefits for shoppers and merchants.

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What does “pay by bank” mean? 

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Pay by bank is a payment service allowing a shopper to send payment to a seller by linking their bank accounts. Money is transferred directly between the customer and business banks, either very quickly or instantly—depending on which rails the payment is processed through. 

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How does pay by bank work? 

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The process of paying by bank is simple:

1. A customer checks out (either online or in-store)
2. They select the pay by bank option for payment (in-store they scan a QR code)
3. They create a profile (this allows one-click payments in the future)
4. The customer logs into their bank account to link their account and profile
5. Once the payment is accepted, the money is transferred from the customer’s checking account to the company’s bank account
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Pay by bank solves modern business problems

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Starting, owning, and operating any business is difficult. But some problems are avoidable, particularly ones solved with advancements in financial technology (fintech).

Pay by bank is increasingly popular at businesses because it’s a simple solution to advanced issues affecting small, medium and large companies. 

Here are key benefits of pay by bank for businesses: 

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Fraud protection

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The U.S. Federal Trade Commission reported consumers lost $8.8 billion due to fraud in 2022. This is because card payments are inherently risky. Anyone can access your money by simply getting ahold of the physical card or card number.

Pay by bank is a very secure way to pay for a number of reasons, including:

• Authentication: Many pay by bank providers (like Aeropay) enable authentication methods like multi-factor authentication (MFA) to verify the identity of the user initiating payment. 
• Data encryption: Data transmitted during the online banking payment process is encrypted to protect sensitive information from being intercepted by unauthorized parties. Encryption standards like SSL (Secure Socket Layer) and TLS (Transport Layer Security) are commonly used for securing online transactions.
• Direct bank integration: Because customers link their bank account via secure API integration, there’s reduced risk of sensitive information being stolen from the merchant’s site. The payment process is handled exclusively within the secure environment of the bank.
• Limited exposure of information: Since customers don’t share card details during the transaction and instead authorize each payment directly from their bank, there's less chance of financial details being exposed or stored in multiple places online. 

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Improved cash flow

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Access to funds has considerable implications for business health. The faster you get your money, the more agile you’ll be in day-to-day operations. For example, if a business needs funds to purchase additional equipment or make emergency repairs, it’s important they can access all available money to do so.

Unlike credit card transactions, pay by bank processes faster payment in near real time. This means merchants receive payment more quickly than traditional payment methods.

This seamless transaction process also reduces the time and resources required for payment reconciliation and reduces time-consuming chargebacks.

In all, pay by bank promotes healthier business standards by improving cash flow and lowering payment-focused spending. 

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Great for highly-regulated industries

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The cannabis industry faces a unique problem. Most US states legalized the plant in some form, but legal cannabis businesses aren’t allowed to accept traditional payment methods.

​​Major card networks like Mastercard and Visa have taken a firm stance on this issue, stating that as long as cannabis is federally illegal, dispensaries won’t be allowed to accept credit cards or debit cards.

The only legitimate and compliant payment option for cannabis retailers are bank-to-bank (ACH) digital payments (like Aeropay). ACH payments allow cannabis customers to send money directly from their bank account to the dispensary in one click from their phone.

Other emerging industries, like fantasy sports, lean on pay by bank solutions to expedite money movement for easy deposits and withdrawals.

Regardless of the industry, pay by bank expedites innovation and resolves long standing payment issues. 

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Why shoppers pay by bank

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Pay by bank isn’t just an optimal payment option for merchants, shoppers love it too. 60% of consumers who use pay by bank options like account to account payments, say convenience is the primary reason they use the method.

Here are some other key benefits to shoppers: 

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No fees

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While consumer-facing card fees are more common in regulated industries like cannabis, pay by bank is a fee-less option for shoppers. The method also offers lower-than-typical processing fees for merchants.
When businesses and consumers pay less in fees, the outcome is a more affordable shopping experience, leaving every party happy.

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No apps or downloads

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Pay by bank solutions like Aeropay don’t involve downloading apps, it’s just a secure connection to a consumer bank through their phone, tablet or computer. 

Plus, these payments can easily include incentives like loyalty gifts, cash-back rewards, and more—providing a more enticing experience for shoppers.

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One-click transactions

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After establishing a secure connection between consumer bank and merchant bank on their first transaction, consumers can pay with a single click every time they make a purchase going forward.  

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Add Aeropay’s pay by bank solution

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As a leading digital payment provider, Aeropay enables reliable pay by bank transactions for in-store and e-commerce business payments nationwide. 

Businesses using Aeropay experience: 

• 25% higher customer spend 
• 30% increase in completed online orders
• 70% increase in online customers returning at most locations

The simplicity, security, and efficiency of Aeropay make it an easy choice for your customers and your business. 

‍Schedule a 15-minute demo to see our full payment solution and make bank-to-bank transfers work for your business.