"Pay by Bank": Why It Outshines Debit & Credit Cards for Recurring Payments

The digital payments landscape is constantly evolving, and with the emergence of open banking, new avenues of transacting are coming to the forefront. One such avenue is the Payment Initiation Service (PIS) which facilitates direct bank transfers. In this article, we'll delve deep into one of its primary applications – recurring payments – and explore why, when compared to traditional debit and credit card methods, bank-initiated recurring payments hold a competitive edge.

1. Enhanced Security Protocols:

Bank's Edge: Direct bank transfers through PIS benefit from the bank's top-tier security infrastructure. These transfers utilize multi-factor authentication, end-to-end encryption, and the bank's internal fraud prevention mechanisms.

Traditional Card's Downfall: Card information, when stored for recurring payments, is susceptible to breaches, which can lead to unauthorized transactions and compromises in data security.

2. Cost Efficiency:

Bank's Edge: Recurring payments via PIS typically come with reduced transaction fees as they bypass intermediary networks. This cost saving can be passed on to consumers, offering them more competitive prices.

Traditional Card's Downfall: Card transactions involve multiple parties (like payment processors and card networks) which can inflate the transaction fees, impacting the overall pricing for consumers.

3. Direct Control for Consumers:

Bank's Edge: Users can manage their recurring payments directly through their bank's interface, allowing them to easily monitor, modify, or terminate transactions. This fosters transparency and builds trust.

Traditional Card's Downfall: Managing recurring payments on cards often requires interaction with the service provider or a separate portal, leading to potential delays and reduced control for the user.

4. Minimized Transaction Failures:

Bank's Edge: With PIS, the risk of transaction failures due to expired cards or exceeded limits is eliminated. The direct bank-to-bank transfer mechanism ensures smoother and more consistent transactions.

Traditional Card's Downfall: Card-based recurring payments are prone to failures. An expired card, a change in card number, or reaching a credit limit can disrupt the continuity of services.

5. Reduced Dependency on External Networks:

Bank's Edge: PIS-driven recurring payments operate within the banking ecosystem. This minimizes the reliance on external card networks, ensuring uninterrupted services even if a card network faces issues.

Traditional Card's Downfall: Card-based transactions are dependent on the card network's stability. Any network downtimes can disrupt recurring payments.

6. Future-Proofing Financial Operations:

Bank's Edge: Open banking, which powers PIS, is the future of financial transactions. Adopting it for recurring payments ensures that businesses and consumers are aligned with the latest in financial innovation.

Traditional Card's Downfall: While cards will continue to play a significant role in the payment ecosystem, their dominance, especially in recurring payments, may wane as open banking solutions become more widespread.

In Conclusion:

The evolution of open banking and the introduction of services like PIS are reshaping how we view recurring payments. While debit and credit cards have served us well over the years, the advantages of direct bank-initiated recurring payments are hard to ignore. From enhanced security to cost efficiency, this new method of transacting promises a more streamlined and secure future for both businesses and consumers.

Adapting to change can be challenging, but with platforms like Fizen leading the charge in offering innovative payment solutions, the transition becomes effortless. As we look towards the future, the choice seems clear: for recurring payments, the bank's way is the way forward.

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