Raynor de Best
Content expert covering payments and (crypto)currencies
A2A payment methods are not a new type of digital payment method but increasingly grabbed attention as banks developed domestic solutions to challenge international card brands. Account-to-account payments are digital transactions from one bank account to another, such as checks, direct debit (ACH, Automated Clearing House), bank transfers (SEPA), and open banking payment solutions within apps and online services. In 2022, A2A accounted for nine percent of global e-commerce payment transactions. This figure is higher than buy now, pay later (BNPL), probably because A2A has been around longer. Indeed, 2016's Payment Services Directive 2 (PSD2) regulation led to the development of some of Europe's most used A2A brands. For merchants, such bank endeavors in payment technology could be an alternative to relatively expensive transaction fees from card networks. Another perceived benefit of open banking is that it will help speed up financial transactions and services. This explains why some of the largest A2A brands in the world are also the brands that apply real-time, or instant, payment technology the most.
A2A payments are a category of payments where open banking and real-time payments come together, with most attention going to bank-led domestic payment solutions that innovate digital payments beyond fintech and traditional cards. What are some of the biggest brands that one should be aware of? And where is the United States in all of this?
A2A payments are a category of payments where open banking and real-time payments come together, with most attention going to bank-led domestic payment solutions that innovate digital payments beyond fintech and traditional cards. What are some of the biggest brands that one should be aware of? And where is the United States in all of this?
A2A is biggest in smaller European countries or in emerging economies
A comparison of A2A transactions by region placed Latin America at the center of apps that enable account-to-account payments, with Europe and Asia-Pacific focusing on bank transfers or direct debit solutions. A notable example of A2A in Latin America is Brazil's Pix. Other A2A bank initiatives in Latin America include MODO in Argentina, YAPE and PLIN in Peru, and PSE in Colombia. Another major player is UPI in India - an instant payment bank transfer system. UPI and Pix are the world's main brands using real-time payment technology. Note that UPI is not a separate app - unlike Pix - but is embedded. iDEAL in the Netherlands, Bizum in Spain, and BLIK in Poland also only function within banking apps or e-commerce websites.The United States' journey in A2A has only just started
U.S. A2A, sometimes called pay-by-bank, reached an e-commerce market share of nine percent in 2022. Nevertheless, merchants hoped the payment option would increase conversion by speeding up transaction time and reducing transaction costs. Whether consumers are open to direct transactions from their bank accounts is unclear. Most American consumers who tried pay-by-bank for the first time in 2023 did so because they could earn rewards, with cashback being the most popular. The release of the real-time payment scheme FedNow in mid-2023 - much later than Pix or UPI - may indirectly impact A2A in the United States, as open banking increasingly takes center stage. Estimates are that approximately 3.8 percent of the overall payments mix in the country will be instant payment by 2027.
