WAYS TO PAY: ACCOUNT-TO-ACCOUNT Unshakable momentum: A2A payments are fast moving from ‘alternative’ to mainstream
The simple logic of A2A CEO of Token, Todd Clyde, says it’s no longer a matter of if, but when, account-to-account payments move into the mainstream. And, once there, they will reshape the payments landscape The noise around account-to-account (A2A) payments is starting to increase as people pick up on the benefits. FIS’ Global Payments Report 2020 predicted that A2A payments will support 20 per cent of all e-commerce transactions, surpassing both credit and debit cards, by 2023. But are we ready? An A2A payment is one where money moves directly from the payer’s bank to a merchant or service provider’s. They’ve been around for years, traditionally used by consumers to schedule regular bill payments such as direct debits. But,
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thanks to the maturing open banking movement, A2A payments look set to shift from an ‘alternative’ payment method to a mainstream one. And, if you look at the wider payments industry, there’s a clear gap for them to fill. Cards and wallets, for example, are both intermediaries. They’ve become dominant forms of payment because they have the largest reach and provide the best conversion rates, but the downside is that they’re relatively expensive – and are based on a percentage model that further penalises large transactions.
A2A payments, which travel over national clearing systems like the UK’s Faster Payments, eliminate the need for intermediaries and therefore have huge potential to reduce friction, boost efficiency and deliver payments at a much lower cost. The issue, at present, is that the world’s clearing systems weren’t designed for consumer-to-business commerce, let alone e-commerce, and so accessing these rails in order to settle over these systems can be difficult. This means that A2A payments, to date, have had a more limited reach. Deciding www.fintechf.com