Consumer adoption of account-to-account payments has been slow to catch on as the novel payment scheme looks to differentiate itself from ever-popular credit card rewards. Payments fintech Prizeout is hoping to make Pay by Bank – and debit card rewards – more commonplace with the launch of a new payment method designed to give credit union debit card users instant cash back.
Prizeout on Tuesday introduced Cashback + Pay, a new standalone application that lets credit union members use account-to-account payment rails to earn cash on debit card transactions.
Prizeout integrates with credit unions’ core and online banking platforms to move money in and out of consumers’ accounts, CEO David Metz told American Banker. At brick-and-mortar locations, customers provide the total amount of their basket, and Prizeout spins up gift cards for the exact amount that the customers use to pay their balances. Similarly, customers can use the app or an online web browser extension to shop online at participating merchants.
“Everything is run through digital gift cards,” Metz said. “The reason why we use digital gift cards is it’s the only thing that is universally accepted everywhere that doesn’t run on Visa and Mastercard rails.”
Cashback + Pay uses account-to-account payments, also known as
“This is actually Pay by Bank,” Metz said. “We’re debiting [the member’s] checking account, moving it into a [general ledger] account that sits with the credit union, and every Friday … we’re the ones paying the merchants.”
Interra Credit Union, Michigan State Federal Credit Union, United Financial Credit Union, Golden 1 Credit Union and People Driven Credit Union are the first credit unions to roll out Cashback + Pay, Prizeout said.
Debit card rewards are often hard to fund because of
“There’s this constant battle in Congress between merchants and banks. [Merchants] don’t want to pay interchange, [but] in this scenario, they’re actually paying more,” Metz said. “But they’re much more happy about it, because they have control. They’re paying ‘What for Who,’ as opposed to paying a toll for being part of the Visa and Mastercard network.”
Prizeout isn’t the only fintech that’s looking to capitalize on opportunity A2A payments. Spire, a payment fintech for everyday spend, in April launched Pay with Spire, a merchant-branded Pay by Bank solution at the point of sale that uses the Discover ACH network.
“Gen Z [and] Millennials, or we call them savvy savers, want to use Pay by Bank,” Spire CEO Matt Brennan told American Banker. “They don’t want credit – maybe they can’t get any more credit. But they also want rewards … and debit has not delivered that.”
Many banks and credit unions have been hesitant to offer account-to-account payment schemes because they are concerned that it will cannibalize interchange revenue, according to the Jack Henry 2025 Strategy Benchmark report. That comes despite the fact that
But Prizeout said credit unions stand to make more money using A2A payments than interchange because the revenue is merchant funded, not card-network dependent, resulting in a higher margin cut from purchases in an incremental, noninterest revenue stream. It also keeps consumers’ spending –
For Michigan State University Federal Credit Union, offering A2A payments is a move to enhance the user experience of its members, President and CEO April Clobes told American Banker.
“I’m hoping this is a differentiator for our checking account,” Clobes said. “We do a lot of marketing related to cash back on everyday spend. If you go to Kroger and you’re paying for your groceries, this would now [allow members to ] get cash back for making that same transaction.”
MSUFCU offers three credit cards with varying degrees of rewards but does not see the Pay by Bank offering as competing against those offerings, Clobes said.
“There are certain transactions I think people will put on a credit card, and then not every merchant is in the cash-back experience,” she said. “There are people who don’t like credit, and there are people who want to manage their money better. We now have a product that provides a cash-back incentive and reward to both types of members.”
MSUFCU is modeling for 1% of all transactions to eventually run through Prizeout’s A2A rewards platform. The credit union currently has 3,800 members using it. About 32,000 transactions worth more than $3.2 million have been completed on the platform since fall 2024, when the credit union started piloting it to select members.
Amazon.com is the top merchant for rewards spending at MSUFCU, Clobes said. Home Depot and Holland American Cruises are also some of the credit union’s most popular merchants.
“In the month of April, there was $50,000 spent from members buying tickets on Holland America cruises because of the cash-back reward,” Clobes said. “Everyone likes a deal.”