Following its success in the UK, Stripe is expanding its pay-by-bank offering to France and Germany. While the process streamlines payment processing for merchants, its adoption by shoppers and end users remains an open question.
The technology relies on TrueLayer’s open banking infrastructure, which enables connectivity to bank accounts across Europe. Stripe highlights the benefits such as improved conversion rates, enhanced security, and the elimination of card processing fees—ultimately lowering transaction costs. Real-time payment processing also helps merchants improve cash flow and reduce payment delays.
A Hard Sell to Consumers
The benefits for customers are less immediate. Stripe says consumers can bypass entering card details and instead authorize payments directly from their bank accounts. However, in more mature economies, similar convenience has already been achieved through other methods such as debit cards or digital wallets.
“This pay-by-bank announcement is similar to other pay-by-bank products that outline in detail the benefits to merchants, but don’t list any benefits to consumers,” noted Don Apgar, Director of Merchant Payments at Javelin Strategy & Research. “This is largely because there aren’t any incremental benefits to consumers of using a pay-by-bank construct like this. Consumers can use their debit cards to pay-by-bank today and get the chargeback rights and purchase protections that come standard with branded debit cards.”
That said, pay-by-bank adoption has been strong in many European markets, with a clear trend toward greater appeal among younger shoppers. Research from MX found that more than a third of respondents ages 18 to 29 reported using pay-by-bank daily or weekly, compared to just 25% across all age groups.
Convincing more experienced consumers to switch to the new method remains a challenge. Many baby boomers, according to MX, said they would never use pay-by-bank, versus an average of 28% across all other generations.
What’s in It for Banks?
In addition to customer resistance, banks may also be reluctant to adopt pay-by-bank solutions.
“Banks would prefer their customers use their debit cards versus a pay-by-bank construct like this because they earn interchange fee income every time customers use their debit cards,” he said. “’Build it and they will come’ may be true in baseball, but it’s never true in payments unless there are benefits to all stakeholders in the ecosystem—including banks and consumers, not just merchants.”
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