JP Morgan Payments partners with Mastercard to pilot Pay-by-Bank service in US

JP Morgan Payments has joined forces with Mastercard to launch a ‘Pay-by-Bank’ service that uses Open Banking to enable consumers’ financial data to be shared between trusted parties to make recurring payments, such as bills and rent, directly from their bank account.

The new service means customers will no longer have to type in routing and account numbers each time they need to pay a bill, while billers and merchants benefit from automated consumer onboarding, both reducing the risk and cost of storing bank account information.

JP Morgan Payments and Mastercard are piloting Pay-by-Bank with a small number of US-based billers and merchants this year, before expanding the service in 2023.

Chiro Aikat, executive vice president, merchants and acceptance at Mastercard North America, said billers and consumers both get greater payment choice through the new service.

“But the partnership also propels payments innovation on two fronts — in the ease of the user experience and in the security of data sharing,” Aikat added.

Typically, bank-to-bank ACH payments are the primary way to pay for recurring payments, including rent, utilities, payments to government, tuition, insurance, and health care.

Billers with consumers that already pay with ACH can choose to integrate the JP Morgan Payments Pay-by-Bank solution on their existing payments page.

Max Neukirchen, head of payments and commerce solutions at JP Morgan Payments, said: “The technology behind Pay-by-Bank reduces the likelihood of unauthorized transactions and frees our clients from the need to retain — and the responsibility to securely maintain — consumer banking information.”

“Together, we will offer an attractive, simple and secure Pay-by-Bank solution that gives choice to our clients and their customers who use ACH as their payment mechanism,” added Neukirchen.

Earlier this year, Mastercard and cloud banking platform Temenos partnered to accelerate the adoption of ‘Request to Pay’ services in the UK, by making it easier for financial institutions to introduce Request to Pay services for their customers.

In June, Mastercard unveiled a new payments feature, ‘Pay by Link’, led by its European Open Banking platform Aiia, and designed to allow businesses to accept and receive payments anywhere.