“I’d never share my bank account details with a business.”

This is a common objection of U.S. consumers when they first encounter pay by bank as a payment option. A relatively new entrant to the increasingly crowded payment method landscape in the US, pay by bank enables customers to make payments directly from their bank accounts, with no card or credit involved. However, to make the payment, the customer needs to authorize a connection to that bank account. 

For customers used to paying with credit cards, wallets, or BNPL, as American consumers are, this can feel a little scary. In fact, you may even feel the same way yourself. And with large scale data breaches, online security, and credit card scams and fraud constantly in the news, it is little wonder that so many people are wary of new payment methods and sharing sensitive bank details — especially when they've always been told to keep sensitive bank details to themselves and no one else. 

However, pay by bank is highly secure. In fact, it is far more secure than payment methods used by Americans daily, including credit cards, BNPL, and wallets. In this post we are going to look at what makes it safe, how it compares to other popular payment methods, and why your customers will love it from a security and convenience perspective. 

Why pay by bank is secure

Pay by bank is a type of account-to-account (A2A) payment, meaning there are no cards involved. At the checkout, your customer simply:

1. Chooses pay by bank from the list of payment methods. 

2. Chooses their bank. 

3. Is redirected to their bank environment to log in and approve the transaction. 

Nice and simple, right? Now let’s unpack the security features of what happens in this flow. 

1. The customer must consent to the transaction

With pay by bank, the customer has to give permission to third-party providers to allow the provider to access their data. This gives the customer complete control over who can access their data, and for what purpose. 

2. No sharing of login details 

Unlike other payment methods, pay by bank does not require customers to share their login credentials (e.g. username and password) with third-party providers. This reduces the risk of those credentials being stolen or misused.

3. Strong Customer Authentication

Pay by bank requires Strong Customer Authentication (SCA), which is a two-factor authentication process that provides an additional layer of security beyond just a password or PIN. The first factor happens when the customer authenticates themself with their usual online banking credentials. This ensures that the payment process is secure and that only the customer can authorize the transaction. The second step happens after logging in, when the customer sees payment details, including the amount and the recipient, and authorizes the payment. SCA is a stark contrast with credit cards, for which criminals sometimes only require the credit card number to commit fraud.

4. Encryption

Finally, pay by bank uses encryption to protect customer data. Customers login directly on the bank website, and a provider such as Link Technology never sees or stores their credentials. Tokenization is leveraged to protect sensitive data, and transactions are processed through vetted merchants that have implemented Link Technology’s secret ID and token security approach.

Pay by bank is actually more secure than credit cards and other payment methods

We all know that credit card fraud is rife, but just to put some perspective on it, four fifths of American adults have at least one credit card, and three fifths of cardholders have experienced unauthorized charges. That’s close to 130 million victims. What’s more, three quarters of victims said they’ve had credit card fraud more than once. And digital wallet fraud is also growing rapidly. 

Due to its bank-grade security features, the risk of fraud for A2A payment methods such as pay by bank is orders of magnitude lower than that of credit cards. In fact, pay by bank fraud is on a par with ACH payments, which sits at around 0.08 basis points, or eight cents for every $10,000.These are figures that credit card companies can only dream about. And in the case of pay by bank, they don’t come at any cost to the checkout experience. 

Customers will love the security of pay by bank

It’s completely understandable that American consumers are wary of sharing bank information with businesses. However, from a security perspective, it is actually far less risky to use pay by bank than to use credit cards or other payment methods, which they already use daily. 

Further, while it may seem that American consumers are married to credit cards, just take a look at the meteoric adoption of wallets and BNPL over the last decade to see how quickly things can change. And internationally, A2A payment methods with similar experiences to pay by bank, such as PIX in Brazil, have also seen meteoric growth.

Pay by bank offers something different, and valuable, to many consumers, a convenient, secure payment method, that doesn’t shoehorn the customer into accumulating debt by default — something that could benefit tens of millions of people in long-term or with high debt, as well as millions more who simply appreciate its security and convenience. 

To find out more about the security features of pay by bank, reach out to sophia@link.money.