Sionic, which has spent more than a decade promoting
The Atlanta company's new Verified Rapid Payments concept enables consumers to earn merchant discounts and rewards by sharing their bank app login credentials to pay directly via account-to-account connections.
The move builds on Sionic's yearslong campaign to give merchants direct channels to reward consumers, including the
This time around, Sionic aims to harness faster-payments technology in combination with its loyalty system to attract more merchants and consumers, said CEO Ron Herman.
"This is a trusted verified payer-payee model that sits on top of the RTP Network and ACH — and eventually FedNow — to connect buyers and sellers who know and trust each other with a built-in system to resolve disputes," Herman said.
After using their phone to scan a QR code at the merchant checkout, first-time users seeking a discount must link their bank account by logging in once to their bank app to authorize a deposit for the sale amount to the merchant's bank, Herman said.
Sionic has enlisted the open-finance technology provider
With each successful payment, participating consumers and merchants will build their own "trust score" on Sionic's platform to verify security. Merchants and consumers may also use the platform to resolve disputes directly and instantly, he said.
"Giving parties the chance to resolve disputes immediately and transparently will eliminate a lot of the problems that lead to fraud and chargebacks with credit cards today," Herman said.
Sionic has lined up several undisclosed merchants that plan to participate in Verified Rapid Payments in coming months with the goal of saving merchants an average of 60% over credit card interchange fees, Herman said.
To roll out its new service, Sionic last month hired Matt Watson as the company's chief technology officer. Watson, a technology consultant for the last decade, previously was CTO at the prepaid card technology firm InComm for several years.
One of the perennial challenges critics mention with consumer-facing payments startups is the difficulty of achieving scale by signing up merchants one by one, which is Sionic's current approach.
But if deals are compelling enough and easy to access, it can spark consumer participation, demonstrated by the rise of buy now/pay later loans, said Sara Elinson, a principal focusing on fintechs at EY-Parthenon, Ernst & Young's global strategy consulting arm.
"I think what a lot of the emerging players fail to realize when they're trying to scale these concepts is that credit card interchange is paying for something — rewards, security and a set of rules that defines what happens when there are refunds, chargebacks and liability," Elinson said.
To directly replicate credit cards' consumer protections within an account-to-account payments system could cost as much as 2% of the purchase, she estimated. That isn't much less than the average credit card interchange rate mainstream merchants pay on transactions, she noted.
"U.S. consumers love the services credit cards provide, and if we're going to see account-to-account services evolve in the U.S., it would require significant customer-protection layers to be built up, which is likely to be quite a challenge," Elinson said.
Sionic said merchant participation fees will offset relatively low expected costs for verifying bank accounts and managing any merchant-customer disputes through its trust-based service.
