25 Nov ACCOUNT-TO-ACCOUNT: THE FASTEST GROWING PAYMENT METHOD IN THE WORLD

After a 50% increase registered in Europe in the last two years, A2A payments are predicted to account for 15% of all transactions globally by 2030

Account-to-account (A2A) payments are alternative payment methods based on online banking, allowing users to pay digitally by transferring funds directly from their bank account into the payee’s one.

Examples of A2A payments include Online Banking e-Payments (OBEP) solutions like iDEAL in The Netherlands, eps-Überweisung in Austria, giropay in Germany and MyBank in Italy.

These alternatives to credit/debit card processing and further traditional methods are booming as they seem to efficiently meet today’s consumer needs in terms of fast, secure payments with personal data protection.

Consumers, banks and small businesses have been adopting A2A payments at an astonishing rate in the last 2-3 years: the number of payment schemes around the world offering account-to-account options rose from 20% in 2019 to 50% just two years later. Globally, A2A payments could account for 15% of all transactions by 2030 for a market value of more than two trillion euros. [1]

To better understand how A2A payments have rapidly grown, let’s take the example of MyBank solution: launched on the European market in 2013, its usage begins to significantly increase in Italy, where in 2014 it is also activated on pagoPA, the Italian portal for all payments to Public Administration entities.

In 2018, just five years after its launch on the market, MyBank exceeds the threshold of 5 billion euros in terms of transacted value and reaches the milestone of 15 billion euros in 2019, opening 2020 with an economic value of transactions increased by 50% in just over six months: a positive trend, even in the context of global disruption and economic challenges due to the pandemic.

The reasons behind such an intense increase in recent years are many and diverse. Undoubtedly, as far as Europe in concerned, the introduction of the Second Payment Services Directive (PSD2), and Open Banking as a whole, have driven innovation, making it easier for both banks and FinTechs to integrate new services, including A2A payment options.

Nevertheless, evolving needs and expectations of consumers and businesses are the main growth drivers.

The perfect fit for consumers

The A2A “system” allows consumers and businesses to pay online in a fast, reliable and secure way, directly from their online banking service.

Paying with MyBank, for example, only involves a few, simple steps:

• When users are ready to pay, they simply choose MyBank and select their bank.
  They get automatically redirected to their online banking service;
• They enter their usual credentials to access their online banking portal.
  A pre-filled bank transfer form is immediately available;
• They check the payment details and simply authorise the transaction. Within a few seconds, both their merchant and themselves receive confirmation of the processed payment.

 

Payers’ authentication is based on Strong Customer Authentication (SCA) mechanisms offered by their own bank. Thanks to the protection of personal data, the traceability of the transactions that are always tracked on their own bank account, and to the absence of a maximum amount limit, this tool offers an efficient solution for purchases or payments of any value and from any device.

The perfect fit for businesses

A2A payments work by moving funds quickly and securely between merchant and consumer bank accounts with no unnecessary intermediaries and no complicated fee structures.

For businesses of any size or industry, collecting payments by account-to-account method solutions is an opportunity to cut costs and facilitate process innovation in a simple and competitive way, while improving business efficiency as a whole. Solutions like MyBank, thanks to the immediate certainty of payment ensured by the irrevocability of the transaction, make it possible to speed up order management, streamline back-office operations with their 100% automatic reconciliation, significantly reduce fraud risks and chargebacks.

The perfect fit for banks

Nine in ten consumers say they would switch banks if a competitor were to offer A2A services ahead of their existing bank. [2] This shows how relevant account-to-account payment solutions are becoming.

A2A payment methods not only allow banks to offer customers new and efficient payment tools, but also to integrate new solutions in a much simpler process compared to the complex and expensive software developments banks so often need to undertake when adding third-party services.

This ease of integration – which includes both Know-Your-Customer (KYC) and Anti-Money Laundering (AML) routines – perfectly fits most banks’ processes, allowing them to enrich their own offer of digital services and advance towards Open Banking.

In this respect, MyBank, which in Italy already covers over 85% of the population with an account at a financial institution, is a valuable partner for banks: born from the cooperation between banks/PSPs, as a forerunner of Open Banking, it is not a substitute for the banking core systems, but rather an enabler of process digitization for the benefit of the entire ecosystem.

 

 

 

[1] Domestic Payment Schemes Jury Report 2021:   https://innovationjury.com/app/uploads/2021/04/Innovation_Jury_Report_2021.pdf

[2] 2020 Payment Methods Report, Aite Group