What you need to know about Account-to-Account (A2A) payments?
Account-to-account (A2A) methods offer fast, secure and low-cost money transfers between bank accounts, without an intermediary. There are no credit cards or third-party processors required. But what exactly are they?
In this article, we'll explain everything you need to know about this innovative payment solution.
Types of A2A payments
There are two types of A2A payments types, which are easy to remember:
A2A push payments
These are generally once-off payments that are sent to a recipient’s account. Therefore, the payment is ‘pushed’ to the bank account. For example, paying for an online shopping purchase.
Push payments can also be triggered by banking APIs, sending the user a notification and requesting to have funds moved out of their account.
A2A pull payments
A pull payment is when a business withdraws, or ‘pulls’, funds from the client’s account. This is generally used with recurring payments, for example, your internet or streaming service account. It is also referred to as a debit order.
Are A2A payments safe?
A2A payments are generally considered safe due to several important security measures, namely:
- Encryption - A2A payments use encryption to securely transmit financial data.
- Authentication - A2A payments typically require two-factor authentication or other security protocols, such as biometrics or authenticator apps, to verify the identities of both the sender and recipient.
- Fraud monitoring - Banks and payment processors use sophisticated fraud detection systems to monitor A2A payments for signs of unlawful activity.
However, A2A security can be compromised by unintended user errors. The mistakes include the incorrect setup for two-factor authentication or unregulated access to the user’s bank account through malicious means.
Open banking and A2A payments
Open banking involves sharing financial data between banks and third-party providers with APIs to enable new types of financial services and products. A2A payments, which enable real-time transfers between bank accounts, are one of the most prominent results of open banking and do not require traditional payment methods.
Previously, bank transfers required users to log in to their accounts every time they wanted to make a payment, with recurring payments necessitating lengthy authorisation processes. The lack of a unified system for initiating subscription payments also made the user experience inconsistent.
As a result, companies had to resort to expensive card network schemes as A2A payments provided no significant advantages over bank card payments. However, open banking has revolutionized the industry, and A2A payments now offer many more benefits than ever before.
What are the benefits of A2A payments?
A2A payments offer several benefits for businesses and merchants over traditional payment methods.
- Speed - Payments can be completed in real-time, allowing for faster transfers and access to funds.
- Lower fees - A2A payments often have lower fees than traditional payment methods, such as wire transfers or credit card transactions.
- Convenience - Payments can be completed through mobile apps or online banking, eliminating the need for cash or checks.
- Greater reach - Anyone who has a bank account can use A2A payments.
- Increased security — A2A payments use advanced security measures to protect financial information and reduce the risk of fraud.
- Better experience — Users can now enjoy a seamless payment experience regardless of whether they are paying via a web browser or a mobile device.
The future of A2A payments
Several trends are becoming more visible on the horizon. Technology advancement is common to all, expected to drive increased adoption of A2A payments.
Real-time payments are becoming more widespread, making A2A more convenient and secure.
In addition, open banking standards and regulations will likely boost innovation and competitiveness in the financial sector, allowing third parties to access financial data via open APIs. This will enable users to make payments through third-party providers, which in turn, will make A2A payments more accessible.
Lastly, blockchain technology is already being used to facilitate A2A payments and could provide a secure and transparent ledger to reduce the risk of fraud and errors.
Interested in A2A implementation tips and how to go about offering these to your customers? Book a live demo today.