
Nacha’s Payments Innovation Alliance, a membership program designed to unite a diverse group of global stakeholders focused on transforming the payments industry, has launched a new project team to explore the question “What is Pay by Bank?” The initiative is open to both existing and new Alliance members.
“Pay by Bank has become a common term in the industry, but there is still no clear consensus on its definition,” said Michael Herd, Executive Vice President of ACH Network Administration at Nacha. “Nacha’s Payments Innovation Alliance is ideally positioned to tackle this question and address any operational, risk, or educational challenges surrounding Pay by Bank payments.”
Nacha’s recent consumer research reveals that although only 13% of consumers are familiar with the term “Pay by Bank,” over half of them report having used it once its meaning is clarified. Awareness and adoption are even higher among younger consumers aged 22-34, with nearly a quarter recognizing the term and 72% stating they have used Pay by Bank when explained to them.
Earlier this month, the Consumer Financial Protection Bureau (CFPB) introduced a rule on Personal Financial Data Rights, which is expected to help enable Pay by Bank payments. The rule mandates financial institutions to provide electronic access to routing and account information needed for ACH and other payment transactions, potentially expanding Pay by Bank adoption.
The Payments Innovation Alliance is composed of a diverse group of financial institutions, fintech companies, solution providers, corporations, and law firms. These members collaborate to identify emerging payment trends and stay competitive in a rapidly evolving payments landscape. Organizations interested in joining the Alliance can learn more at Nacha’s website.
About Nacha
Nacha oversees the ACH Network, a payment system that facilitates secure, fast, and smart Direct Deposits and Direct Payments, reaching all U.S. bank and credit union accounts. In 2023, the ACH Network processed 31.5 billion payments, totaling $80.1 trillion. Nacha drives innovation and interoperability in payments through problem-solving and consensus-building among diverse industry stakeholders. It develops rules, provides industry solutions, and offers education, accreditation, and advisory services.