Card alternatives like pay by bank are on the rise

Payment services innovation like pay by bank and BNPL is expanding the options for shoppers and merchants, giving competition to incumbent card issuers.

Card alternatives like pay by bank on the rise

Long-dominant card payment schemes are facing newcomers leveraging new-age technologies that promise frictionless, more convenient, and fast payment transactions.

The pay by bank model, also known as account to account payments, is also gaining traction based on convenience and comparatively low fraud. Users pay online purchases via their bank account without a debit or credit card.

Account to account payments accounted for $525 billion in global e-commerce transaction value in 2022, up 13% from $463 billion in 2021. Account to account payments are on a growth course, with a projected value of $850 billion by 2026, according to VoPay, a Canadian PayTech.

A form of short-term credit, Buy Now Pay Later, is increasingly popular among merchants and consumers. A Global Data report valued the BNPL market at more than $309 billion in 2023 and predicts a 5% CAGR from 2019 to 2026.

Juniper Research says BNPL users will surpass 900 million globally by 2027, up from 360 million in 2022.

What’s the catalyst?

In 2023, Apple launched Apple Pay Later in the US, allowing users to split purchases into four payments over six weeks with no interest or fees.

Apple is joining other Big Techs in BNPL waters. BNPL firms, including Australian FinTech Afterpay, have partnered with Google and Apple. And Amazon teamed up with Barclays and Citi to offer instalment payments.

BNPL – as the credit alternative to credit cards and revolving credit – is becoming a fan favourite among merchants and consumers, especially for Gen Z and millennials.

A September 2023 report from Statista estimates that BNPL transactions worldwide will increase by nearly $450 billion between 2021 and The hike represents a further acceleration of what happened between 2019 and 2021, when BNPL grew by almost 400%.

Big Techs are swiftly gaining market share in the payments processing space. In 2022, adoption rates of e-wallets were by far the largest in Chinese Big Tech platforms (WeChat Pay of Tencent: 81%, Alipay: 69%) while US Big Techs only have 1% to 9% adoption rates.

Capgemini’s World Payments Report 2023 revealed that the adoption of new payment services, including instant payments and e-money, is on the rise, going from 21% of global non-cash transaction volume in 2022 to a projected 28% in 2026.

That report also projects that between 2022 and 2027, non-cash transaction volume will grow at a CAGR of 15%, propelled by a sophisticated digital payments infrastructure and the adoption of new payment instruments.

What Next?

FinTechs are steadily gaining acceptance among consumers with innovative payment instruments:

United Arab Emirates-based FinTech Dapi and Mastercard partnered in Q2 2023 to enable pay by bank payments in the UAE via Mastercard Payment Gateway Services – a white-label solution for payment processing and fraud prevention.
US-based online bank SoFi partnered with Mastercard in 2023 to develop a BNPL initiative that allows SoFi members to split a $500 purchase into four interest-free payments. Pay-in-4 lets SoFi customers make purchases at online and in-store merchants across the US.
In 2023, the National Payments Corporation of India (NPCI) revealed several new features of the Unified Payments Interface (UPI) – a pay by bank service sponsored by the Reserve Bank of India (RBI). New offerings include a UPI credit line and Hello! UPI, a conversational payment feature.
In 2023, the European Payments Initiative (EPI) acquired the most famous Dutch payments solution iDEAL– as well as Luxembourg-based payment technology provider Payconiq International – to offer a pay by bank service to fuel its projected pan-European wallet, a regional alternative to global card schemes, global wallets, Apple Pay, and Google Pay.


With the rise of alternative payment instruments turning up the competitive heat industrywide, payment transactions will become faster and more convenient in 2024 and the years ahead:

Pay-by-bank transfers will help reduce the risk of fraud, which remains a significant challenge for card payments.
BNPL is on track to become aa strong payment instrument, especially among younger generations. Findings by Research FDI indicate that over half of BNPL users prefer this service over credit cards, and 38% of users say BNPL would eventually replace their credit cards.


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