Plaid deploys Pay By Bank for recurring payments

American FinTech Plaid, known for its bank connection services, recently launched “Pay by Bank for Bill Pay”, a solution that enables consumers to pay recurring bills directly from their bank accounts. Faced with the rise of A2A (Account-to-Account) payments, players like Plaid are now seeking to carve out a place for themselves alongside the very dynamic players such as Visa and Tink, for example.

FACTS

• Plaid will now allow users of its services to do away with the need to use credit or debit cards to pay recurring bills. Consumers will be invited to authorize instant, secure payments directly via their bank details.
• Plaid uses the example of paying for a car insurance policy online to illustrate the value of its initiative. But Plaid stresses that its offer is also relevant to the wider payment of insurance, rents and mortgages, telephone subscriptions and streaming services, for example.
• Plaid Pay by Bank is available across all channels: online, via the app or in-store. Registered users in the Plaid network also benefit from a one-click online experience.
• Plaid's “Pay by Bank for Bill Pay” solution is already in use by Plaid customers operating in the telecommunications, property management, insurance, automotive and rental management sectors.

CHALLENGES

• Reduce costs: Plaid estimates that using its “Pay by Bank for Bill Pay” service could save accepting businesses up to 40% compared with the costs applied to card payments.
• Disrupting Visa: Companies like Plaid, Stripe and Nuvei are exploring these solutions to deliver a smoother user experience and more efficient payment processing. Plaid is positioning itself today to compete with established players, to reduce dependence on traditional card payment networks such as Visa and Mastercard, but also to compete with schemes already positioned in this area.
• Strengthening its position: Plaid had of course already positioned itself in this major new market driven by Pay By Bank payment solutions. In November 2023, Adyen announced the launch of its Pay By Bank solution in partnership with Plaid in the United States. Scheduled for deployment in early 2024, the solution is expected to reduce fraud and the costs associated with payments. Plaid has also been offering a payment initiation API since 2021.

MARKET PERSPECTIVE

• Today, payment automation is motivating market players, who are multiplying their initiatives to establish themselves as benchmarks.
• In addition to Plaid, Venmo is reportedly preparing to launch a “ set it and forget it ” functionality, developed to schedule payments and requests on a monthly, weekly or fortnightly basis. This solution would also automate payments between individuals.