Speaking as someone who tried (and failed) to build a competitor, merchants don’t actually care about the fees. We built a mobile payment system using bank transfer rails (ACH debits and FedNow credits) for ecom platforms. QR payments, just like AliPay, but for the US. We studied past failures at this same idea, and targeted specifically high ticket items (jewelry, luxury), because the fees are a bigger problem, and we could solve other problems with pay-by-bank like limiting botting/scalping and providing digital proof of purchase for resellers.

We raised some money, built it, and demo’d it to dozens of different business. Instant clearing, way cheaper fees, bundle fraud insurance, digital proof of purchase. But it was an uphill battle- people didn’t want it.

Merchants might say they care about the fees, but in practice they care about conversion and getting sales. If you want them to act you need to promise to bring in new revenue, not reduce their cost of existing revenue.

Second problem is the rails. Your only option to debit is ACH, and ACH’s can be returned by the customer for any reason up to 60 days after the debit. Even with return-risk profiling, we had issues with Russian fraudsters using stolen SSNs to onboard as a merchant, do a “custom jewelry” sale for thousands, then as soon as the merchant gets paid out, ACH R10. The “merchant” has RTP’d that money away so when we try to debit it NSFs.

RfPs on FedNow (if they ever get widely adopted) would solve this, because at least they’re irreversible. Until then the only competitor is crypto, but good luck getting US consumers to use a different currency at checkout without tanking your conversion (people have tried!!)