Account-to-account payments (Account-to-Account (A2A) Payments) can briefly be described as making a payment by transferring money from one bank account to another. Although similar to wire transfer/EFT transactions, account-to-account payments can be defined as an alternative payment method because they create a seamless experience by incorporating the money transfer into the payment process and linking the transfer to the transaction it is paying for.
With A2A payments, consumers can make online payments without needing a card, view their bank account balances before approving the payment, and benefit from bank-level data security.
There are many solutions worldwide for A2A payments. Among the many examples of these payments, American Express has also developed a solution. On this subject, Vice President Dan Edelman said: "Paying by bank transfer is part of our commitment to offer consumers and businesses in the UK new payment method options. We are excited about Open Banking and the benefits this product will provide to both consumers and merchants." This is an indication that account-to-account payments will increasingly become part of our lives.
So what are the advantages of A2A payments?
We can group these advantages into benefits for the merchant and benefits for the paying party.
Benefits to the Merchant
- Transaction cost is highly critical for a business. Account-to-account payments provide a significant cost advantage because there is no commission similar to the interchange fee found in card transactions. Since there is no interchange fee in account-to-account payments, banks do not incur a per-transaction cost. For this reason, the fintechs that intermediate the transaction can also pass on lower costs to merchants.
- With card payments, due to the clearing system, the merchant can only receive its money at least 1 day later. With A2A payments, the money is usually deposited into the merchant's account within minutes.
Benefits for the Paying Party
- Although card payment systems have taken many security measures against fraud, there are many bank customers who avoid using cards out of concern about their card information being stolen. With A2A payments, since transactions are generally completed through the bank channel, they are perceived as more secure by the customer.
- A2A payments are easier than card transactions. Although many sites offer one-click payment, wallet integrations, and the like, card information still needs to be entered for card payments on many sites. In this case, we need to have the card with us. With account-to-account payments, the payment can be easily completed using bank login credentials.
- The goal of a cashless society is making itself felt more and more every day, and digital payments are evolving toward cashless payment methods. A2A payments remove the card barrier standing in the way of the transition to cashless payment. Account-to-account payments offer a fast and easy solution for users who have a bank account but no card.
With the increasing effectiveness of systems like BKM Karekod and FAST in particular, we can already say that account-to-account payments will become a bigger part of our lives and make our payments easier.
