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Pay-by-bank services face standardization headwinds

Account-to-account payments have become a priority area for regulators, but industry participants argue that rule makers need to do more to support wider use of pay-by-bank services.

Photo: iStock

One of the challenges to wider use of pay-by-bank services is that making account servicing payment service providers liable for transactions with limited data leads to large numbers of transactions being declined.

“If transactional risk indicators were mandated, then these service providers would have more data to make decisions on,” says David Parker, chief executive at Polymath Consulting.

There is a need for education of both consumers and banks where misconceptions persist or there is a general lack of awareness
Lena Hacklöer, Brite Payments

“Further, the potential for payments initiation service providers to put a message in the transaction saying they would agree to a liability shift on that transaction with a specific merchant might enable the account servicing payment service providers to approve more.”

Brite Payments founder and chief executive Lena Hacklöer refers to an urgent need to improve the frameworks and processes that will encourage greater adoption, beginning with application programming interface (API) standardization and access.