How a New Cardless Payment Option From Discover Works
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Here's your money briefing for Tuesday, February 15th. I'm J.R. Whelan for The Wall Street Journal. Technology has made it pretty easy to make a purchase at the store. A lot of folks just load a credit card into their phone and wave it in front of a scanner. But more merchants are allowing consumers to sign up for a different kind of arrangement, where money is deducted from their checking account without the use of a card. It may sound a lot like debit, but it's more than that.
So if consumers are told, look, you know, if you pay by bank account, you'll be able at the point of sale when you're making the purchase, not to pay the sticker price that you see, but to pay a somewhat lower sticker price. Well, that becomes the incentive for the consumer.
So how would it work and what risks come with it? We'll talk with our consumer credit reporter, Anna Maria Andriotis, about it after the break.
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A lot of us buy things through debit payments. You know, you swipe or tap your card and the merchant deducts the funds from your bank account. But soon you could be able to make purchases without your card. Discover will soon give merchants the option to deduct funds from a person's bank account without them having to use their cards. So how would that work and what's in it for you? Anna Maria Andriotis covers consumer credit for the WSJ. She had the scoop on this and she joins us now with details.
What new cardless bank-account payment is Discover introducing?
Hey, Anna Maria, thanks for being with us.
Great to be speaking with you.
So Anna Maria, this method of merchants drawing money from a consumer's bank account without physically using a card, is this something new?
It's still very new in the U.S., though not new at all in other countries, particularly in Asia, where paying directly from your bank account without using a card is pretty much the norm, in particular in China and other countries in Asia.
Alright, so how does this work? If somebody isn't tapping or swiping their card at checkout, how does the merchant access the consumer's bank account?
For consumers who choose this payment method they would have to basically link their checking account to the merchant's app. And so they would have to put in some personal information about themselves within the merchant's app, and that would link up their account with the merchant to their checking account. And then from there, going forward when they're shopping using the merchant's app, they would be able to essentially just tap on that payment option within the app to make the payment So right now, you know, when you're within a merchant's app or even on its website and you're on the payments page, if you've stored any payment accounts there, you'll see you can tap on your credit card or your debit card.
And in this case, sort of consider that where they'd be able to tap on the pay by bank option, essentially.
Okay. So this is a little different than having your credit card loaded into the so-called wallet on your phone.
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