# Why Pay by Bank App will come into its own in 2022 
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-04-08
Category: BANKING
Category URL: https://financedigest.com/category/banking
Meta Title: 2022: The Year Pay By Bank App Takes Off
Meta Description: Discover the reasons behind the slow adoption and recent surge in popularity of Pay by Bank app, as major banks sign on to support this innovative payment
URL: https://financedigest.com/why-pay-by-bank-app-will-come-into-its-own-in-2022html

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![Gary Prince, Chief Strategy Officer and Vice Chairman, SimplyPayMe](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/1da32req-1736815891834-compressed.jpg)

_By_ **_Gary Prince,_** _Chief Strategy Officer and Vice Chairman, SimplyPayMe_

A mobile payments solution designed to utilise the Faster Payments network, Pay by Bank app enables consumers to make debit payments in real-time, via their mobile banking applications. It was created by Vocalink (now owned by Mastercard) with the aim of removing the need for [debit cards](https://www.financedigest.com/visa-has-terminated-global-debit-card-agreements-with-ftx.html "Visa has terminated global debit card agreements with FTX") and simplifying payments. On paper, it seemed like a clear winner, but it didn’t immediately fire industry minds. And despite much discussion and even the signing of agreements,over six years down the track, the idea is yet to take hold. But 2022 looks [set to tell](https://www.financedigest.com/norways-wealth-fund-tells-firms-to-set-net-zero-emission-goals.html "Norway’s wealth fund tells firms to set net zero emission goals") a different story for the emerging payment model.

**Why has [Pay By Bank app been such a slow](https://www.financedigest.com/uk-recruiters-slow-pace-of-pay-growth-in-march-rec-survey-shows.html "UK recruiters slow pace of pay growth in March, REC survey shows") burner?**

Initiating any change within the [financial sector will always be fraught with hurdles](https://www.financedigest.com/3-common-financial-hurdles-for-the-self-employed-and-how-to-overcome-them.html "3 Common Financial Hurdles for the Self Employed (And how to Overcome Them)"). Compliance is a constant concern. And the [status quo](https://www.financedigest.com/pelosi-praises-taiwan-says-asian-trip-wasnt-to-change-status-quo.html "Pelosi praises Taiwan, says Asian trip wasn’t to change status quo") provides familiarity and safety.  But for the Pay by Bank app, the difficulty came down to awareness and infrastructure. Which presented a problem of a cyclical nature.

CFIs (issuing banks) and payment processors were wary of supporting a model that had little customer demand. But customers can only demand the products that they are aware of. And with Pay by [Bank app being unsupported by the established financial](https://www.financedigest.com/financial-crime-is-the-chink-in-the-banks-armour.html "Financial crime is the chink in the banks’ armour") infrastructure, there could be little opportunity for customers to become familiarised with the service.

Where Pay by Bank app has been implemented – Funky Pigeon is the latest example of a highly successful launch – consumers have embraced the solution. But the number of [active Pay](https://www.financedigest.com/with-the-right-active-manager-you-really-do-get-what-you-pay-for.html "With the Right Active Manager, You Really Do Get What You Pay For") by Bank app hosts has remained modest. Partly due to the lack of interest shown by existing [payment industry](https://www.financedigest.com/open-banking-the-real-step-change-for-the-global-payments-industry.html "Open banking: The real step change for the global payments industry") participants.

So, where has this apathy on the part of the [payment industry come](https://www.financedigest.com/e-commerce-without-frontiers-not-when-it-comes-to-payment-2.html "E-commerce without frontiers? Not when it comes to payment") from? While there was little [customer demand for a new way to pay](https://www.financedigest.com/shell-energy-to-pay-for-overcharging-price-cap-customers-ofgem.html "Shell Energy to pay for overcharging price cap customers -Ofgem"), there were other factors at play too. Pay by [Bank app offered](https://www.financedigest.com/first-abu-dhabi-bank-reiterates-not-eyeing-offer-for-standard-chartered.html "First Abu Dhabi Bank reiterates not eyeing offer for Standard Chartered") few incentives to CFIs because it didn’t provide an additional revenue stream. Instead, it sought to not only replace a well-established, proven, and profitable model, but held the potential to cannibalise the existing revenues which issuing [banks earn from debit card interchange fees](https://www.financedigest.com/20-billion-in-bank-service-fees-are-you-overpaying.html " Billion in Bank Service Fees: Are You Overpaying?"). And with CFIs showing an unwillingness to come onboard combined with the limited customer base, [payment processors have lacked the motivation to offer the service](https://www.financedigest.com/igtbs-payments-services-hub-faq.html "iGTB’s Payments Services Hub – FAQ").

But with new investment and support secured, 2022 now looks likely to be the year in which Pay by [Bank app becomes](https://www.financedigest.com/banks-need-to-become-a-lifestyle-brand.html "Banks need to become a lifestyle brand") a payment presence to be reckoned with.

**Why is Pay by Bank app finally taking root?**

The answer to this is threefold.

Firstly, there is the recent news that NatWest has agreed to become a CFI. With HSBC and Barclays already acting as CFIs, the UK’s three largest [retail banks](https://www.financedigest.com/uk-retail-banks-is-irrelevance-curtailing-opportunity.html "UK Retail Banks: Is Irrelevance Curtailing Opportunity?") will now be offering the solution. This secures Pay by [Bank app’s place within the infrastructure of the British payments industry](https://www.financedigest.com/the-survival-of-the-banking-industry.html "THE SURVIVAL OF THE BANKING INDUSTRY"), and provides it with a larger potential audience to target.

Secondly, the potential Pay by Bank app audience is now more willing. The updated Payment Service Providers Directive (PSD2) legislation – of which [Open Banking](https://www.financedigest.com/open-data-represents-the-biggest-challenge-to-banks-in-a-generation.html "Open data represents the biggest challenge to banks in a generation") is a part – has engendered change. In seeking to further [prevent online card fraud](https://www.financedigest.com/payroll-fraud-and-how-to-prevent-it.html "Payroll fraud and how to prevent it") and enhance consumer security and protection, the legislation has introduced new levels of customer authorisation for online card transactions. While the move comes from a useful and necessary place, it adds a new layer of complexity to [online shopping](https://www.financedigest.com/the-high-street-is-dead-long-live-online-shopping.html "The high street is dead – long live online shopping! ") that many consumers resent. Consequently, an alternative [payment method which holds the potential to streamline the checkout process](https://www.financedigest.com/are-your-payment-processes-in-cheque-for-the-new-legislation.html "ARE YOUR PAYMENT PROCESSES IN CHEQUE FOR THE NEW LEGISLATION?") holds appeal to a waiting audience.

Thirdly, there is already greater awareness of Pay by [Bank app amongst potential customers](https://www.financedigest.com/communicating-with-the-customer-is-the-future-of-mobile-banking.html "Communicating with the customer is the future of mobile banking") – sellers as well as buyers – thanks to an intensive marketing campaign. With the knowledge of Pay by [Bank app processing costing users 0.45% of each transaction](https://www.financedigest.com/igtb-launch-digital-transaction-banking-available-as-saas.html "iGTB launch Digital Transaction Banking available as SaaS"), versus the 1.4% of debit card transaction fees, there comes significant incentive for businesses to offer the solution. When you add in the faster transferral of funds [combined with the established security protocols of Pay by Bank](https://www.financedigest.com/digital-experience-and-security-the-crucial-combination-for-banks.html "Digital experience and security – the crucial combination for banks") app, it becomes an appealing proposition. Especially for SMEs, where rapid turnover can be the key to scalability. The growth of [Open Banking](https://www.financedigest.com/how-will-open-banking-impact-the-customer-experience.html "How will Open Banking impact the customer experience?") has also supported this increase in awareness. When HMRC awarded a £3 million Open [Banking contract to fintech](https://www.financedigest.com/fintech-v-the-banks-uneasy-bedfellows-or-a-match-made-in-heaven.html "FinTech v the Banks: Uneasy Bedfellows or a Match Made in Heaven?") startup Ecospend in February 2021, it began the journey towards the broad promotion of real-time push payments. Showing consumers that there is life beyond the traditional payment model.

The [payment ecosystem](https://www.financedigest.com/the-future-of-payments-biometrics-within-the-financial-ecosystem.html "The Future of Payments: Biometrics Within the Financial Ecosystem") is currently changing at a rate not seen since the introduction of the debit card. But while cash remained King for many years after there was a debit card in every household, the advances of [technology and the digital](https://www.financedigest.com/you-cant-get-faster-than-that-spring-statement-update-delivered-digitally-as-it-happens-with-app-driven-technology.html "‘You Can’t Get Faster Than That’ – Spring Statement Update Delivered Digitally As It Happens with App-driven technology") lifestyle are also prompting a change in consumer behaviour. With [digital payment](https://www.financedigest.com/italys-nexi-signs-digital-payments-deal-with-tims-olivetti.html "Italy’s Nexi signs digital payments deal with TIM’s Olivetti") models, such as PayPal, already well established, the leap towards Pay by Bank app isn’t such a great one. It’s just a small step that provides a big solution. And with industry support established, it seems that 2022 is likely to be the [year Pay By Bank](https://www.financedigest.com/how-open-banking-will-change-the-banking-industry-in-the-next-10-years.html "How Open Banking will change the banking industry in the next 10 years") finds its feet.

**_About Author_**:

_SimplyPayMe is an award-winning global payments company whose [mobile](https://www.financedigest.com/what-is-the-optimum-mobile-payment-mix.html "What is the optimum mobile payment mix?") based payment and business management solution is specifically designed and engineered to meet the growing demands of the underserved SME community._


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