Walmart Plans Instant Bank Payments, Cutting Out Card Networks

An anonymous reader quotes a report from Bloomberg: Walmart customers will soon have the option to pay directly from their bank accounts with instant transfers for online purchases. The enhanced feature is a flash point in the escalating tensions between merchants and the card networks setting the fees for payment processing. The world's largest retailer has offered pay-by-bank through Walmart Pay since earlier this year. Until now, the transactions were akin to digital checks and took roughly three days to finalize when being processed through The Automated Clearing House, the same network often used for bill payments or paycheck deposits. Soon, customers opting for pay-by-bank transactions will see the purchase reflected in their bank account balance instantly -- and Walmart will receive the funds immediately.

Walmart's upgraded pay-by-bank offering will be rolled out in 2025. The transactions will occur over bank technology provider Fiserv's NOW Network, which integrates with The Clearing House's Real Time Payments network and the Federal Reserve's FedNow. Until now, large retailers hesitated to launch real time payment options because many banks were not connected to an instant settlement system, meaning their customers would not be able to use the product. NOW Network aims to connect to as many banks as possible to reach 100% of deposit accounts by combining its own network with RTP and FedNow. The instant pay-by-bank product will be available for online checkout on Walmart.com. The Bentonville, Arkansas-based retailer already has customers set up a profile when they shop online. If they opt to add pay-by-bank as a payment option on their profile, they will enter their bank login credentials to connect their account. Fiserv's AllData platform connects with their bank clients and vendors including Plaid, MX, Akoya and Finicity to link and authenticate consumer accounts. With this instant pay-by-bank product, consumers will avoid stacked pending transactions, which can open them up to the risk of overdraft or non-sufficient fund fees from their bank. 'When the transaction processes as a real time payment, customers get immediate access to see that payment come through, I see it hit my account and I can properly budget,' said Jamie Henry, vice president of emerging payments at Walmart. 'It's not as if I've got this phantom payment out there that's going to take place a couple days down the road.'

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