Walmart Inc. customers will soon give you the option to pay for online purchases directly from their bank accounts using quick bank transfers. The expanded feature is a flashpoint in escalating tensions between retailers and the cardboard networks that set payment processing fees.
The world's largest retailer began offering wire transfer payments through Walmart Pay earlier this yr. Until now, transactions resembled digital checks and took about three days to clear through The Automated Clearing House, the identical network often used for bill payments or payroll deposits. Soon, customers who decide to pay by wire transfer will see the acquisition reflected of their checking account balance immediately – and Walmart will receive the cash immediately.
The consumer advantage of quick bank payment over debit cards is that there aren’t any ongoing pending transactions. According to Jamie Henry, vice chairman of recent payment methods at Walmart, pending transactions can put customers with low balances vulnerable to overdraft or non-funding fees from their bank.
“When the transaction is processed as a real-time payment, customers can see immediately that the payment has been received. I see that it has hit my account and can plan my budget accordingly,” Henry said. “It's not like I have this phantom payment that's not due for a few days.”
In the U.S., most consumers have credit or debit cards, which supply convenience, fraud protection and, within the case of credit products, rewards programs. However, frustration has grown amongst merchants over the fees they pay to banks and networks like Visa and Mastercard for card processing. At the identical time, consumers are upset because some merchants pass these fees on to them in the shape of surcharges. As frustration over card fees grows and more banks use real-time systems, alternative payment methods like pay-by-bank have a probability to realize ground.
“It surprised me,” Henry said of Walmart's launch of its first version of the “by bank” payment method, which is accessible online but has not yet been marketed to customers. “It has definitely exceeded our expectations in terms of the number of customers who have signed up and are actually using this payment method.”
“As an industry, we believe we need to create that connectivity,” said Matt Wilcox, head of digital payments at Fiserv. “FedNow and RTP don't necessarily talk to each other. The NOW Network can play that role in the industry by bringing all of those networks together to enable applications like paying by bank.”
The quick bank transfer payment product shall be available for online checkout on Walmart.com. The Bentonville, Arkansas-based retailer already has its customers arrange a profile after they shop online. If they select so as to add bank transfer payment as a payment option of their profile, they enter their bank credentials to attach their account. Fiserv's AllData platform connects with its banking customers and suppliers, including Plaid, MX, Akoya and Finicity, to link and authenticate consumer accounts.
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