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Mastercard Inc. early Wednesday said it will launch two new payments tools that rely on the card network’s rapidly growing stake in open banking and account-to-account transactions. The new digital tools, which Mastercard says will not be available until later this year, are expected to address risk and uncertainty in automated clearing house payments by assessing the availability of funds and setting speed of payment.
One of the new tools, Payment Success Indicator, will let the payment originator check on the user’s account balance as well as his or her historical payments behavior. The “indicator” is a score summing up these properties. The payment originator could be a bank but also a digital wallet or payment service provider, Mastercard says. Then the other tool, Payment Routing Optimizer, uses the score to generate a recommended speed of payment via the ACH, for example, the same-day or next-day service. The Optimizer could also recommend a debit card payment, according to Mastercard.
The new service will rely on the open-banking technology Mastercard acquired when at the end of 2020 it bought Finicity Corp. for $825 million. Open-banking networks allow fintechs to verify account ownership and balances to move money for users of online services and apps. “When payment originators use Payment Success Indicator and Payment Routing Optimizer, consumers provide informed authorization to allow their bank account data to be shared with the payment originator to enable transactions,” Mastercard says in a news release issued Wednesday.
The network also cites a study it released earlier this year indicating 74% of U.S. consumers are willing to link their bank accounts to financial apps to enable such functions as payments. Among Generation Z and Millennial consumers, some 90% have already done so, according to the survey.
Faster payments on the ACH network are on the rise, and are expected to increase at an even quicker pace now that Nacha, the network’s governing body, has raised the daily limit on same-day payments from $100,000 to $1 million. Same-day credits and debits totaled $944 billion in value in 2021, double the volume in 2020, according to Nacha figures. Transactions totaled 604 million, up 74%.
Mastercard last year added to its portfolio of open-banking capabilities with its deal to acquire Aiia, a European firm with connections to 2,700 banks and an account-to-account payment volume of more than 1 million transactions monthly. That deal followed similar moves by rival Visa Inc. to acquire open-banking assets. Visa recently closed on its $2.15-billion deal to acquire Tink AB, another European open-banking provider. That transaction followed Visa’s agreement to buy the U.S. firm Plaid Inc., a deal Visa ultimately abandoned in the face of opposition from the U.S. Justice Department on antitrust grounds.
