It’s still early days, but Ross McFerrin sees great potential for pay by bank. 

“What’s really going to drive ACH or pay by bank in the U.S. is value. Whether that’s flexibility, whether that’s incentives, whether that’s something that that end user is not going to get from their bank—that’s what’s ultimately going to drive adoption of pay by bank,” said McFerrin, Vice President of Enterprise Growth at Trustly Inc., a Nacha Preferred Partner for ACH Experience/Open Banking/Risk and Fraud Prevention. 

Among Gen Z consumers, 72% expressed a strong willingness to use pay by bank. While younger generations express openness to pay by bank, McFerrin said he understands the aversion some people—particularly boomers and Gen Xers—have to giving out their banking credentials. But he believes that hurdle can be overcome.  

“What’s ultimately going to happen is as you see open banking, pay by bank, more and more in checkout, that visibility and awareness should help to guide even the older demographics to utilization,” said McFerrin on Nacha’s Payments Smartcast podcast.  

Any organization creating ACH transactions through a pay by bank method has a lot to consider, not the least of which is conforming to the Nacha Rules, said Amy Morris, Nacha Senior Director, ACH Network Rules. High on that list is the matter of authorization, said Morris. 

“I need to first authorize [the originator's] partner to be able to facilitate this type of interaction to allow for the access to my data. That does not take the place of the requirements for authorization under the Nacha Operating Rules,” Morris told the podcast. “We can’t forget about the actual authorization for the ACH transaction.” 

And while Nacha highlights other concerns for pay by bank participants, including data security, Morris said there’s great reason for optimism on the future of pay by bank. 

“It’s very possible to have successful transactions through the ACH Network utilizing these new capabilities and also… maintaining that safety and security and the high quality of transactions that we are able to enjoy through the ACH Network.” 

Down the road, McFerrin expects to see “a lot more utilization within those everyday spend categories” such as supermarkets, fast food and gas stations. There’s also what he called “cracking the code to a retail experience,” where pay by bank is not just for online shopping, but instead allows people to “come in a store and use their bank account to make a purchase there as well.” 

Much more was discussed, and you can download the complete podcast here.