Account-to-Account (A2A) Payments

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What are Account-to-Account payments?

Account-to-Account (A2A) payments allow the direct transfer of funds between two bank accounts. A2A payments give customers the option to forego intermediaries such as payment gateways and card networks, reducing complexity in the process of a transaction and enabling instant settlement of funds.

A2A is poised to become customers’ preferred payment option worldwide within the next decade. Banks must act now to prepare their infrastructure for this incredible opportunity if they are to capitalize on the rise of A2A.

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The benefits of A2A payments

Account-to-Account payments take advantage of Open Banking infrastructure to transfer funds quickly and seamlessly between two accounts. Without the need for payment gateways or banking networks, and with anti-fraud security happening in tandem, funds are checked, transferred and cleared in real-time.

Instant Settlement

Tapping into Open Banking infrastructure, funds can be transferred between two accounts without the need for a payment facilitator.

No Intermediaries

Without the need for payment gateways and card networks, and with the support of Open Banking, the cost of transactions is significantly reduced.

Security & Compliance

Anti-fraud and regulatory checks, such as Confirmation of Payee, are built into the payment process.

Cross-Border Interoperability

Unlike legacy networks and gateways, Account-to-Account payments utilise Open Banking to bypass the normal clearance process at borders.

Payments Interoperability

How does it work?

A2A payments sound simple enough – like any other form of payments, except without intermediaries. But in order to ensure a compliant, robust and efficient A2A payment, your banking system must be capable of performing a number of functions in tandem and in real-time.

Authorisation and Request to Pay (RTP)

A transaction can be initiated by the customer authorising a transfer of funds, or by the recipient delivering a payment request.

Authentication & Compliance

Both the customer’s bank and the recipient’s bank communicate to verify the identities of both parties, and to ensure the customer has the necessary funds.

Transfer

Once authenticated, the money is transferred from the customer to the recipient’s account. The transaction is facilitated by the payment rail or real-time payment network powering the sender’s bank account.

Settlement & Reconciliation

Instant Payments mean instant settlement, and the funds should be available within the recipient’s account in as little as 10 seconds.

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The scale of the opportunity

Account-to-Account payments are one part in a wider puzzle that will redefine the way we pay.

As the world moves towards a fully interoperable model of payments, enabling transactions to happen instantly, banks and payment services providers (PSPs) must adapt to the new global standard, or risk losing customer sentiment.

The momentum has already started, with Brazil and India leading the way, and Europe and Asia not far behind. But there is still a long road ahead – and it’s up to individual PSPs to begin the process of becoming interoperable themselves.

By 2030

Account-to-account (A2A) payments could overtake card transactions across many key global markets.

Key challenges for banks

Whether you choose to develop your own system or integrate third-party infrastructure, enabling Account-to-Account payments will require both extensive technical development, and a transformative approach to your banking services.

Technological Integrations

Enabling A2A payments begins with migrating to an interoperable system that supports Open Banking and Instant Payments.

Regulatory Compliance

With A2A payments facilitating high volumes of cross-border transactions, PSPs must remain compliant with ever-changing global laws and regulations.

Fraud prevention & Cybersecurity

A2A payments open the door to new opportunities for fraud. Can your organisation stay one step ahead of potential vulnerabilities and protect customers?

Interoperability

The success of A2A payments will depend on all banking networks and payment rails worldwide communicating effectively to achieve a single global payments standard.

Global payments experts

Why choose RedCompass Labs?

For over 20 years, RedCompass Labs has helped banks in over 20 countries to manage enterprise-scale transformation. With over 140 people, including world-leading technical experts, we have the expertise and the experience to help your organisation adapt to an interoperable future.

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