Who Will Control Payment Initiation?

The payments industry is contesting control of payment initiation, the point at which consumers and businesses start transactions. Companies that control this stage can influence which services customers use and which payment methods merchants offer.

Banks, payment processors, technology companies and regulators are involved in the dispute. Control over payment initiation can affect the customer relationship, the data created by transactions and the fees earned when money moves between accounts.

The debate centers on whether payments should continue to start mainly through bank-owned channels or through third-party services linked to customers’ accounts. The choice will affect how payment services are designed, distributed and regulated.

Payment initiation is the instruction that begins a transaction, such as a bank-account transfer or a purchase made through a digital service. A company controlling that instruction can shape the customer experience and determine which payment method appears at checkout.

The dispute comes amid wider use of digital payments and account-to-account transfers. Businesses are seeking faster and less expensive ways to accept payments. Banks and other financial companies are competing to retain customers and transaction revenue.