The news: US consumers’ growing digital payment use could make in-store pay-by-bank adoption more likely, per the Federal Reserve Bank of Kansas City.

How we got here: Pay-by-bank has historically failed to capture US in-store retail payment volume because it’s hard to use at the point-of-sale. However, merchants’ overwhelming adoption of NFC-capable terminals provides a pathway for pay-by-bank to take off in-store.

US consumers are rapidly moving toward mobile-first payment options: 

• From 2021 to 2025, the share of US consumers who made mobile payments at the POS more than doubled to 21.3%
• The share of POS transactions that consumers made via mobile devices almost tripled to 15%. 

This suggests that US consumers are shifting quickly to mobile-first solutions, particularly for younger, higher-income, and higher educated shoppers.

Implications for merchants: Even after building out the infrastructure to accept pay by bank, getting consumers to use it will be an uphill battle. 

Until paying by bank has the upsides of a credit card—payment flexibility, installments, rewards—consumers have few incentives to defect to a payment method whose primary benefit is saving merchants money.

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