A2A Payments Are on the Rise: How They're Driving Value for Consumers and Businesses

In recent years, the global impact brought on by Open Banking solutions has reached an all-time peak – and it keeps climbing higher. Practical, alternative payment solutions that were once only an idea are now at the forefront of an ever-changing industry landscape. One of Open Banking’s most noticeable impacts has been on A2A (Account-to-Account) payments. 

A2A payments allow you to move money between accounts, but they are typically manual and labor-intensive (think bank transfers). Open Banking’s use of APIs connects banks with third parties so that money can be moved directly from an account to a merchant. New regulation and innovative technologies have opened paths for merchants and banks to minimize the need for card schemes in the payments ecosystem. And progress continues to grow.

A recent report by The Paypers highlights how new trends are pushing traditional card methods further down the payments pipeline. As we move further into the future, the payment solutions ecosystem has experienced massive shifts in consumer preferences in just a short amount of time. 

The report shines light on new trends and challenges that have one thing in common: all roads eventually lead to Open Banking via A2A payments. Right now, cards may still be king, but new alternatives are taking reign. 

New trends driving up demand for A2A payments

With the adoption of alternative payment methods continuing to rise, the industry is adapting to more nuanced changes in a way that makes what we are seeing seem less like an evolution and more like a revolution. E-wallets are integrating into lifestyles making them function more like super wallets, while alternative payment methods are beginning to cover broader spectrums of services. 

Millennials and their younger Gen Z counterparts seem to be the main group(s) opting into new payment alternatives. Their strong preference for digital banking solutions is part of what’s driving many FinTechs to try and meet new demands. More than anything, they are looking for personalized experiences that bring ease while enhancing their overall time spent online.

With increasing interchange fees and processing costs for merchants, traditional card payments are on the decline. In a nutshell, interchange fees are the fees merchants pay when consumers use their credit or debit cards at checkout. If these fees continue to rise, merchants might be inclined to raise the price of their goods to cover additional costs – negatively impacting consumers. By cutting out the middleman and connecting merchants directly to their customers, A2A payments and Open Banking solutions dramatically reduce these costs.

We’re also seeing that new payments technology upgrades are prioritizing a consumer-centric approach. This means consumers are on the receiving end when it comes to the rising demand to create space for more seamless experiences, speed, and convenience – with the latter two leading in priority. The genuine need for all three is fueling the rise of Open Banking and A2A payments. 

Open Banking benefits for consumers 

Open Banking solutions offer clear and obvious benefits for merchants: lower processing costs, guaranteed payments, no chargebacks, reduced fraud and security risks, etc. But, the rewards consumers reap from the same solutions are also plentiful. For one, added security and mitigated risk around payment flows are just as beneficial for consumers as they are for merchants. Other advantages make the general customer experience less rocky, more refined, and more safe. 

For example:

• Letting customers pay directly from their bank account saves time they would’ve lost had they otherwise keyed in card details.
• Complete, consensual control over access to shared data brings peace of mind to consumers handing over important information.
• Shifting money around effortlessly while investing, gaming or betting eliminates stress and worry by creating a seamless flow of movement. 
• Access to personalized data enables merchants to build more tailored, customized products and offers for consumers.

It’s encouraging to know that these perks are driving up the demand for more Open Banking and A2A solutions, as they provide consumers with alternatives when it comes to how they handle their money. But, merchants will still need to take the lead when it comes to convincing their consumers to fully adopt these methods. 

Consumer adoption will take time

The pattern of consumer payment methods has flowed from cash to checks to cards to, now, peer-to-peer payments. The time it takes for one payment method to take over another is accelerating. Some consumers are really loyal to their preferred systems. Others have taken a genuine interest in embracing new technologies. Although it’s happening quickly, there’s still quite a bit of ground to cover before alternative payments solutions are fully integrated into the lives of the general public. This will take time and consistency, but the momentum is there. 

To stay aligned with changing payment trends, merchants must stay hip to what’s hot and what’s still only warm amongst the latest market developments.

Staying ahead in a future where A2A dominates

From March 2021 to March 2022, The Open Banking Implementation Entity (OBEI) in the UK noted a 232% increase in Open Banking enabled A2A payments. 

The demand is there. But, as mentioned earlier, to drive consumer adoption and to stay ahead of the future’s curve, companies must find ways to continue meeting the consumer’s needs for “stability, user experience and conversion.”

Merchants and FinTechs also need to be able to show that they can be counted on as far as privacy, security, and safety. Simply put: consumers need to know they’re buying into something they can rely on. A dwindling economy, inflation, and times of uncertainty often spark fear in the minds of the public. 

Trustly’s real-time Open Banking solutions

The simplest way to deliver real-time, faster payments – in a safe, secure way – is to offer Open Banking-powered payment methods that can meet consumers where they already are.

Trustly's commitment to helping both merchants and consumers thrive, while maintaining their financial goals, is key to helping revolutionize the payments landscape. Our digital A2A payments system eliminates the middleman by linking merchants to their consumers directly from their bank accounts.

To learn more about how Trustly’s services can help facilitate real-time banking solutions, reach out to one of our experts.