Stripe Collaborates with TrueLayer to Introduce Bank Transactions in France and Germany
In a significant stride for the European payments landscape, Stripe and TrueLayer have announced the launch of pay-by-bank services in France and Germany. This move signifies the transition of open banking from concept to competitive advantage in the region.
TrueLayer, a leading open banking platform with over 10 million users across 21 European countries, currently serves both local and international clients in France and Germany. The company processes an impressive $40 billion annually, facilitating 120 million transactions, with France and Germany being two of its largest markets outside the UK.
Pay-by-bank, a payment method that allows users to authorise payments directly from their bank accounts using biometrics, is expected to help merchants reduce fees and improve conversion rates. This real-time, secure payment method bypasses card networks, offering faster transactions and increased security through bank-approved authentication.
The EU's active promotion of open banking and instant payments could give Stripe a strategic edge in Europe. The region benefits from more embedded banking systems and regulatory frameworks like the EU’s PSD2 directive, which facilitate seamless open banking innovations, encouraging broader acceptance and trust in pay-by-bank solutions.
However, the U.S. market's adoption of pay-by-bank is currently less mature compared to Europe. The U.S. banking system's fragmentation and varied state regulations complicate unified adoption. However, growing real-time payments infrastructure, fintech innovation, and consumer demand for seamless experiences create a promising environment for pay-by-bank to expand in the U.S. over time.
American consumers tend to be hesitant to link their bank accounts directly for payments, which could pose additional challenges. However, education and the unification around simple, brand-agnostic terms like "Pay by Bank" could aid adoption.
TrueLayer offers tools like Signup, a streamlined onboarding tool, and VRP, a tool for flexible, bank-authorized recurring transactions, to help businesses adapt to the pay-by-bank system. The number of pay-by-bank payments in Europe is expected to reach 30 billion by 2028.
The adoption of pay-by-bank in the U.S. could face additional headwinds if the Consumer Financial Protection Bureau (CFPB) were to reverse its open banking rule. Despite these challenges, the potential benefits of pay-by-bank, including faster transactions, reduced fees, and improved security, make it an exciting development for the future of payments in both Europe and the U.S.
Technology plays a crucial role in the pay-by-bank services launched by Stripe and TrueLayer, as this real-time, secure payment method leverages biometrics and bank-approved authentication for enhanced security. Additionally, TrueLayer, an open banking platform, offers tools like Signup and VRP to facilitate businesses adapting to the pay-by-bank system, contributing to the expected 30 billion pay-by-bank payments in Europe by 2028.
