Updated June 20, 2022
Account-to-account (A2A) payments are reshaping how consumers and businesses handle payments. With all of the exciting changes in the payments industry, one might assume the A2A payment phenomena is new. However, in reality, they've been around for decades.
That being said, there are three good reasons why we are seeing an A2A payment revolution.
With Open Banking in place, account-to-account payments are just a movement of funds directly from one account to another with no go-between. This transfer of funds can either be from the same financial institution or another one with no middleman involvement.
Send money (Push payments)
Initiate direct bank payments to send money to users or service providers.
Example: A ride-sharing platform pays drivers per trip, or an e-commerce platform needs to pay multiple vendors.
Accept money (Pull payments)
Instantly debit or credit any North American bank account.
Example: A lending platform collecting payments from borrowers or an e-commerce site collecting payment during checkout.
The stats are in, consumers and businesses bypass credit card fees and their limits, meaning A2A payments are on an upward trajectory. As the demand for contactless, frictionless, and speedier payments continues, we expect the payment industry to evolve and innovate to meet expectations.
The fact is money simply moves faster with this payment solution. Not to mention, they are more adaptable and most importantly to merchants and consumers alike, they don't expire.
To illustrate further, in 2020 alone, Canada saw 2.9 billion account-to-account transactions worth a cumulative $5.1 trillion. Not to mention the significant uptick noted in the U.S. as well.
Businesses that are ready to banish checks for good will undoubtedly gain a boost in the cash flow department. As quick delivery and settlement times become a high priority, immediate A2A payments can spare vendors the worrying about when checks will reach them, the time to process them, and when those funds will finally become available.
Speed is the outcome of this payment solution running on new payment rails. When data moves alongside those funds, B2B transactions gain the upper hand. From accounts payable (AP)to accounts receivable (AR) and all the way up to the boardroom, real-time data enables strategic decision-making.
This payment method is guaranteed to deliver cost savings. Remove the "middleman," and you remove the costs in return. Add in the magic of an API where a business can connect directly with the bank, which delivers significant savings. This means no credit card processing fees. In fact, according to Fintech Futures, A2A payments can be up to 90% cheaper for merchants. Savings such as these could simultaneously add to a company's bottom line while also passing along a percentage to the consumer to enhance customer experience.
Further to this, account-to-account payments solve a significant business pain point. That credit card expiration date businesses often encounter? With account-to-account payments, that becomes a thing of the past.
A2A payments can move funds from one company's bank account directly to the recipient's account using a variety of payment networks. A2A transactions can also integrate with back-office systems like enterprise resource planning (ERP) and AP applications.
Payments fail for several reasons, be it insufficient funds or incorrect card details. However, with account-to-account payments, businesses have complete visibility throughout the transaction life cycle, including bank account and balance verification. No credit card limits and no credit card declines mean fewer problems for both the customer and the company.
Unlock the next market leaders in the global digital economy with innovative digital payments technology offering comprehensive B2B payment solutions for acceptance and disbursement of direct bank payments.
Speak to a payment specialist today to learn more about our customized account-to-account payment services.