Pay-by-bank is gaining traction as an alternative to card payments and Mastercard is at the heart of its development.
European fintech ZEN.COM has announced it will offer pay-by-bank services through Mastercard Open Finance across nine European countries.
The service is live in Austria, Belgium, Germany, Italy, Ireland, Lithuania, the Netherlands, Portugal and Spain. It is available to all ZEN.COM merchants and for digital wallet top-ups in the nine aforementioned markets.
Founded in 2018, the fintech provides digital financial services through an app that allows users to manage money, make payments, send transfers, and hold and exchange multiple currencies.
ZEN.COM’s digital wallet means customers can manage their funds and make payments from their ZEN.COM account. Merchants using ZEN.COM can also accept pay-by-bank payments in addition to cards and other existing payment methods.
Through its partnership with Mastercard, ZEN.COM aims to offer customers and merchants a choice of payment methods.
“Pay-by-bank is becoming one of the fastest-growing ways to pay in Europe, and with Mastercard Open Finance we brought it live across nine markets through a single integration,” said Łukasz Neska, Chief Growth Officer at ZEN.COM.
Mastercard’s ever-growing role in open finance
Mastercard, as the latter half of its name suggests, is best known for its global card network. However, over the years, the payments giant has expanded into cybersecurity, fraud prevention and open finance.
Open finance is attracting more and more attention as financial services providers look for ways to make payments simpler and more connected.
Pay-by-bank allows consumers to initiate payments directly from their bank accounts, offering an alternative to card payments and traditional bank transfers.
Mastercard’s Open Finance infrastructure supports these account-to-account payments by connecting financial service providers with bank account services. In ZEN.COM’s case, this has enabled the fintech to launch pay-by-bank across nine European countries through a single integration.
“Businesses want to focus on serving customers and growing across markets, not managing multiple integrations and payment infrastructures,” said Valerie Nowak, EVP, Head of Open Finance, Mastercard APEMEA.
“Through our partnership with ZEN.COM, we’re helping make pay-by-bank easier to deploy, easier to scale, and easier for consumers to use across a wide range of European markets.”
Pay-by-bank looks to challenge cards
Pay-by-bank has gained traction as an alternative payment method, with one of its most frequently discussed advantages being the potential to avoid interchange fees associated with card transactions.
Interchange fees are charges set by card networks such as Visa and Mastercard and paid by merchants’ banks to cardholders’ banks when a customer makes a card payment.
The fees have also led to legal challenges against Visa and Mastercard. Earlier this week, law firms Harcus Parker and Hausfeld announced proposed collective claims at the UK’s Competition Appeal Tribunal over interchange fees paid by British businesses.
The claims could be worth around £5bn ($6.66bn) and concern fees paid on consumer debit, credit and prepaid card transactions since October 2020.
The UK is also looking to develop its payments ecosystem through the government’s National Payments Vision, which could lead account-to-account payments to play a bigger role.
Account-to-account payments are already gaining ground in online retail. Amazon and eBay both offer pay-by-bank at checkout in the UK, allowing customers to pay without entering card details.
However, wider adoption still faces challenges in a market where consumers are used to paying by card or through digital wallets such as Apple Pay.
This could change very soon following a recent move by the UK’s Competition and Markets Authority. On 20 October, the regulator proposed requiring Apple to give developers access to the iPhone‘s near-field communication technology on fairer terms.
Opening up NFC access could help fintechs develop competing digital wallets and new contactless payment services, including services that initiate account-to-account payments.
