Walmart wants to push pay-by-bank to save on swipe fees

The news: Walmart will roll out an enhanced pay-by-bank offering in 2025 through a partnership with Fiserv, per Bloomberg.

• The retailer currently offers pay-by-bank via Walmart Pay on Walmart.com. Transactions are processed through Automated Clearing House (ACH) and typically take three days to finalize.
• But through the Fiserv tie-up, transactions will be processed over Fiserv’s NOW network, which uses The Clearing House’s RTP network and the Federal Reserve’s FedNow Service.

With the new version, transactions will immediately show up in customers’ bank account balances, and Walmart will receive the funds instantly.

Why Walmart is doing this: Credit cards are costly for merchants to accept—and merchants are signaling they’ve had enough.

• eBay stopped accepting American Express cards in August after failing to renegotiate swipe fees.
• Merchants are also forcing Visa and Mastercard back to the negotiating table after a judge rejected their swipe fee settlement, saying it doesn’t go far enough.
• Retail trade groups also support the Credit Card Competition Act (CCCA), which would force banks to offer third-party networks with lower fees.

What it means for real-time payments: US real-time payment adoption trails that of global markets.

• RTP accounted for only 1.8% of US electric payments volume in 2023, per EMARKETER calculations using ACI Worldwide data.
• Comparatively, real-time payments accounted for 19.1% of global electronic transactions that year.

Expanding real-time account-to-account (A2A) payments into retail can help the payment method gain share. And Walmart’s tie-up with Fiserv can boost volume on FedNow, which has been off to a slow start.

Will other retailers follow suit? As a retail and ecommerce leader, Walmart has the power to influence others in the industry. If its pay-by-bank offering takes off, its rivals will likely want to also offer this payment method to stay competitive.

But securing strong adoption will be a hurdle.

• The major benefits of A2A payments are mostly for the merchant.
• But for credit card users, using A2A would mean giving up plush rewards and financing benefits.

Our take: If Walmart and other retailers want to grow pay-by-bank adoption, they need to incentivize their shoppers with things like sign-up deals or special discounts.

They should also target their pay-by-bank marketing efforts to demographics that don’t rely as much on credit cards to begin with.