Open Banking jroc
North America Open Finance Trending

Mastercard and J.P Morgan’s Pay-By-Bank Brings Open Banking Tech to ACH Payments

Open banking is gradually entering the mainstream as organisations are becoming more and more aware of its benefits. The payments sector becomes the latest to experience it, as ACH payments are made simpler and more secure. 

Launched by J.P. Morgan Payments and Mastercard, Pay-by-Bank is an ACH payment that uses open banking, which enables consumers to permission their financial data to be shared seamlessly between trusted parties to let them pay bills directly from their bank account with greater security.

No longer will they be faced with the tedium of typing in routing and account numbers each time they need to pay a bill. For billers and merchants, it automates consumer onboarding and reduces the risk and cost of storing bank account information.  

Pay-by-Bank holds huge potential for billers to take the pain out of recurring payments. Rent, utilities, payments to government, tuition, insurance, and health care where ACH is the primary medium of payment can be made easier.  

Billers whose consumers already pay with ACH can choose to integrate the J.P. Morgan Payments Pay-by-Bank solution on their existing payments page. At checkout, consumers select ‘Pay-by-Bank’. They will then be prompted to find their bank, and verify themselves using their own bank’s familiar authentication process. This could be a biometric scan, for example. Finally, they will securely share their bank account information with JPMC to complete the payment on behalf of the biller.  

Pay-By-Bank pilot

J.P. Morgan Payments and Mastercard are piloting Pay-By-Bank with a small number of US-based billers and merchants this year. They expect to expand in 2023. 

“Our aim is to stay at the forefront of payments innovation,” says Max Neukirchen, head of payments and commerce solutions, J.P. Morgan Payments. “We’re delighted to work with Mastercard on this solution as their open banking capabilities will transform the payment experience.

“Together, we will offer an attractive, simple and secure Pay-by-Bank solution that gives choice to our clients and their customers who use ACH as their payment mechanism. This is part of J.P. Morgan Payments’ vision to accept any payment, anytime, anywhere.” 

“Billers and consumers both get greater payment choice,” says Chiro Aikat, executive vice president, merchants and acceptance, Mastercard North America, “but the partnership also propels payments innovation on two fronts — in the ease of the user experience and in the security of data sharing.” 

“The technology behind Pay-by-Bank reduces the likelihood of unauthorised transactions and frees our clients from the need to retain — and the responsibility to securely maintain — consumer banking information,” Neukirchen says.  

Pay-by-Bank also uses machine learning in Mastercard’s smart payment decisioning tools to analyse the best time to initiate the payment based on the bill payer’s historical transaction behavior and risk patterns, which protects the consumer and merchant by ensuring important payments get made and can reduce the risk of returns due to insufficient balance.  

Mastercard’s strides in paytech

Pay-by-Bank is another open banking innovation which lets people and businesses safely share their data to access innovative experiences. From new ways to pay to secure, frictionless lending, it brings the promise of the digital economy to more people.

Mastercard brought its payments expertise and experience into the world of account-based payments in 2017 with the acquisition of Vocalink. Since then, the company continued to focus on efforts that deliver greater choice and security in financial service experiences including investments in open banking like the acquisitions of Finicity and Aiia.  

“We realised years ago that the way people think about money and commerce is changing,” Aikat says. “They want to pay and get paid how they choose, where they choose and when they choose. We’re excited by this new partnership with J.P. Morgan Chase, and our opportunity to empower people with enhanced payment experiences.” 

Industry response

In response to the news, Hiroki Takeuchi, co-founder and CEO of GoCardless, said:

“This announcement is further confirmation that direct bank payments are the way of the future. In the UK last year, more payments were made on Faster Payment rails than on credit card.

“Around the world, advancements in open banking have transformed the speed, ease and security of bank payments, putting them on equal — and often better — footing than cards for a variety of use cases. The fact that JPMorgan and Mastercard have waded into this space validates what we’ve been doing for over a decade, and it signals that mass adoption is imminent.”


  • Francis is a journalist and our lead LatAm correspondent, with a BA in Classical Civilization, he has a specialist interest in North and South America.

Related posts

Fattmerchant Introduces Contactless by Omni to Help Businesses Meet the Growing Consumer Demand for Contactless Payments

Mark Walker

The Potential and Reality of Cryptocurrency in Video Gaming

Mark Walker

This Week in Fintech: TFT Bi-Weekly News Roundup 14/03

The Fintech Times