Nacha’s Payments Innovation Alliance Leads Industry Effort to Define and Shape the Future of Pay by Bank

Nacha’s Payments Innovation Alliance, a membership program that brings together diverse global stakeholders seeking to transform the payments industry, will address the question “What is Pay by Bank?” through a new project team open to all existing and new Alliance members.

“Pay by Bank has become a common industry term of art over the past several years, but there is not yet industry consensus on what it means,” said Michael Herd, Executive Vice President of ACH Network Administration at Nacha. “Nacha’s Payments Innovation Alliance is well-positioned to take on this question and to identify any operational, risk and educational issues associated with Pay by Bank payments that also should be addressed.”

Nacha’s latest consumer research shows that while only 13% of consumers are familiar with the term "Pay by Bank," over half report using it once they understand its meaning. Awareness and usage are even higher among younger consumers aged 22-34: nearly a quarter recognize the term, and 72% say they have used Pay by Bank when it’s explained to them.

Earlier this month, the Consumer Financial Protection Bureau issued a rule on Personal Financial Data Rights that it said could help enable Pay by Bank payments. The rule will require financial institutions to make available through electronic interfaces the routing and account information needed to initiate ACH and other payments. This could ultimately expand the number of customers using Pay-by-Bank options.

The Alliance includes a diversified group of financial institutions, fintech companies, solution providers, corporations and law firms, all of which collaborate to identify current and emerging payment trends, enabling members to stay competitive in a rapidly evolving payments landscape. Organizations interested in learning more about the Alliance, including how to join, can visit https://www.nacha.org/payments-innovation-alliance.

About Nacha

Nacha governs the thriving ACH Network, the payment system that drives safe, smart, and fast Direct Deposits and Direct Payments with the capability to reach all U.S. bank and credit union accounts. There were 31.5 billion ACH Network payments made in 2023, valued at $80.1 trillion. Through problem-solving and consensus-building among diverse payment industry stakeholders, Nacha advances innovation and interoperability in the payments system. Nacha develops rules and standards, provides industry solutions, and delivers education, accreditation, and advisory services.

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