Open Banking
Open Banking
April 18, 2024
3 min

Pay by Bank vs Cards: Consumer Experience

Timothy Shin

Open Banking Expert

In this next installment of our series examining Pay by Bank vs Cards, we’re looking at the differences between them regarding consumer experience. Great consumer experiences should be top of mind for merchants and business owners, especially at checkout. Every payment method merchants offer should be optimized, streamlined, and, above all, frictionless to ensure customer satisfaction. 

But why is this so important? The majority of consumers want friendly and frictionless experiences, with 73% of consumers reporting it as an important factor in their buying decisions. One of the best ways a merchant can ensure a frictionless customer experience is to provide and enable Pay by Bank options powered by Open Banking. That way, consumers can make purchases quickly and securely. 

The Importance of Consumer Experience in the Digital Age

The lifeblood of the success of any business is the customer service they provide. Customer service comes in many different forms, but one that’s often overlooked is the payment experience that consumers face. Friction in the payment experience can lead to direct consequences, like churn.

In the modern digital age, consumers are increasingly weary of merchants who don’t provide up-to-date checkout methods that are seamless, easy to use, and secure. While cards and Pay By Bank transactions both can offer this, there are stark differences in how they approach giving customers what they want to see for payment options. This is an area where Pay by Bank shines.

Improving Consumer Experience with Pay by Bank vs Cards 

Here are a few key differences between how Pay by Bank can improve customer experience at checkout versus cards. 

Availability and Accessibility 

Cards are everywhere in today’s society and are accepted by virtually everyone. The ubiquity of credit and debit cards has allowed them to permeate every industry and vertical, making them easily accessible and a reliable form of payment for consumers, whether in-store or online. But there are benefits of Pay by Bank payments.

Pay by Bank is expected to see strong growth, especially with the recent release of new rails like FedNow. There has also been strong growth in merchants incentivizing Pay by Bank adoption, with FIS’ 2023 Global Report projecting its growth well into 2026. Pay by Bank is making inroads to catching up to the availability and accessibility that cards currently hold

Making Frictionless Payments Possible for Consumers 

No one enjoys manually entering credit card information into a checkout or payment screen. Even if card information can be stored to autofill later on, that doesn’t always work since cards expire, get lost, or get stolen, which means waiting for another card and entering new details all over again. 

Pay by Bank, when powered through Open Banking, only requires the consumer to sign in with their online banking account. They won’t need to manually enter numbers or worry about expiring payment methods. Once consumers log in, the API handles the rest. As a bonus, no information or sensitive financial details get stored, and there’s less risk of exposure to malicious actors trying to commit fraud.

Building Customer Loyalty 

Cards have loyalty programs to attract customers and often work with merchants to create their own branded cards, etc. But the catch includes annual fees and, of course, using the credit card regularly. When compounding the fact that many Gen Z and Millennials are becoming credit averse because of mounting card debt, there might not be much incentive to build loyalty to a business through cards alone. 

Pay by Bank allows merchants to accept payments via bank account. The Open Banking API facilitating these transactions allows merchants to gain valuable data and insight into consumer profiles. This enables them to craft tailor-made loyalty and VIP programs for their customers sourced directly from bank-grade data. 

Make Consumer Experience a Top Priority 

Improving consumer experience should be at the top of merchants' priorities. Don’t overlook how your existing payments setup can impact the experience consumers may have with your business. Payment options outside the card networks can help you reduce risk, embrace digital payments, and build customer affinity for your business. The revolution is here, and it’s called Pay by Bank!

With Trustly Pay, you can accept low-cost guaranteed payments and cater to the modern consumer. If you have any questions or want to see a free demo, contact us!

As we continue this series, please be sure to check out our initial entries discussing Pay by Bank cost savings and fraud prevention.

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