Seeking to provide online merchants with a lower-cost payment option and consumers a better user experience, a 3-year-old, Toronto-based payment-service startup called Clik2pay is enabling Canadian consumers to pay for online purchases directly from their bank accounts at participating merchants.
The new payment option, which launched Thursday, leverages the Interac Corp.’s eTransfer service which facilitates funds transfers between personal and business bank accounts through Canada’s five national banks and credit unions. Interac operates the national switch in Canada for electronic payments.
Enabling consumers to pay for online purchases directly from their bank accounts is expected to provide Canadian e-commerce merchants with a lower-cost payment alternative to credit cards. “Merchant profiles have changed the past 18 months during the Covid pandemic and those that didn’t do a lot of business online are more heavily reliant on the channel for sales, and this option is a way for them to lower the cost of an online transaction, while providing consumers all the security of online banking,” says Clik2pay chief executive and founder Mike Bradley.
Leveraging Interac eTransfer, which Canadian consumers are familiar with, also reassures consumers, since the transfers are moved directly from their bank account through a trusted national network, Clik2pay says.
Consumer trust in alternative payment methods is a key ingredient to success, says Patricia Hewitt, principal at PG Research and Advisory Services, a Savannah, Ga.-based consultancy.
“Consumers are open to alternative payments, and when it comes to e-commerce there is a need to broaden the thinking around the user experience, but whether consumers embrace alternative payment options comes down to trust and convenience, especially when it comes to payments originated from their checking and bank accounts,” says Hewitt.
Lowering online merchants’ cost of acceptance also plays a role in the success of alternative payment methods, particularly as e-commerce volumes have risen sharply over recent months as Covid-wary shoppers prefer to buy online. “The cost to merchants is a huge factor, as merchants are always looking for ways to bypass the card networks,” Hewitt says. “Technology is overcoming the need for card-based payments.”
While efforts to launch payment options that directly debit a consumer’s bank account have emerged before, only to struggle to gain traction, what differentiates Clik2pay is that it leverages a ready-made network that supports every bank in Canada, says Bradley.
In addition to enabling online payments direct from bank accounts, Clik2pay supports bill and invoice payments from customer bank accounts by text message, e-mail, or QR code. Clik2pay features for businesses include easy-to-use application programming interfaces, end-to-end payment tracking, real-time notifications, status updates, transaction history and a complete settlement file.