Walmart Inc. customers will soon have the option to pay directly from their bank accounts with instant transfers for online purchases. The enhanced feature is a flash point in the escalating tensions between merchants and the card networks setting the fees for payment processing.

The world’s largest retailer has offered pay-by-bank through Walmart Pay since earlier this year. Until now, the transactions were akin to digital checks and took roughly three days to finalize when being processed through The Automated Clearing House, the same network often used for bill payments or paycheck deposits. Soon, customers opting for pay-by-bank transactions will see the purchase reflected in their bank account balance instantly – and Walmart will receive the funds immediately.

The consumer advantage of instant pay-by-bank over debit cards is avoiding stacked pending transactions. For customers carrying low balances, pending transactions can open them up to the risk of overdraft or non-sufficient funds fees from their bank, according to Jamie Henry, vice president of emerging payments at Walmart.

“When the transaction processes as a real-time payment, customers get immediate access to see that payment come through, I see it hit my account and I can properly budget,” Henry said. “It’s not as if I’ve got this phantom payment out there that’s going to take place a couple of days down the road.”

In the US, most consumers carry credit or debit cards which offer convenience, fraud protections and, in the case of credit products, rewards programs. However, frustration has mounted among merchants over fees they pay for card processing to banks and networks like Visa and Mastercard. At the same time, consumers are bristling as some merchants choose to pass these fees on to them in the form of surcharges. As frustration with card fees grows and more banks connect to real-time systems, alternative payment methods like pay-by-bank have an opportunity to gain traction.

“It surprised me,” Henry said of the adoption of Walmart’s first iteration of pay-by-bank, which is available online but hasn’t been marketed to customers. “It’s certainly surpassed our expectations of the amount of customers that have registered and actually use the payment type.”

Walmart’s upgraded pay-by-bank offering will be rolled out in 2025. The transactions will occur over bank technology provider Fiserv’s NOW Network, which integrates with The Clearing House’s Real Time Payments network and the Federal Reserve’s FedNow. Until now, large retailers hesitated to launch real-time payment options because many banks were not connected to an instant settlement system, meaning their customers would not be able to use the product. NOW Network aims to connect to as many banks as possible to reach 100% of deposit accounts by combining its own network with RTP and FedNow.

“As an industry, we believe we need to create this connectivity,” Matt Wilcox, head of digital payments at Fiserv, said. “FedNow and RTP, they don’t necessarily talk to one another. The NOW Network can play that role in the industry of bringing all these networks together to enable applications like pay-by-bank.”

The instant pay-by-bank product will be available for online checkout on Walmart.com. The Bentonville, Arkansas-based retailer already has customers set up a profile when they shop online. If they opt to add pay-by-bank as a payment option on their profile, they will enter their bank login credentials to connect their account. Fiserv’s AllData platform connects with their bank clients and vendors including Plaid, MX, Akoya and Finicity to link and authenticate consumer accounts.