In March 2024, there were 16 million account-to-account (A2A) payments made in the UK, powered by open banking. If the future of payments is A2A, then the future is here now. Adoption is accelerating dramatically as businesses embrace this new and cost-effective way to accept consumer payments without the complex intermediary layers associated with card payments.
A2A payments use open banking technology to move funds directly between participating bank accounts. It is fast, secure and user-friendly. It is the first and only payment method built in, and designed for, the digital era.
But there is more to be done. The existing legislation that created this opportunity for innovation stops short of enabling businesses to accept A2A payments on a recurring basis – for example, for subscriptions, bill payments, and 1-click shopping – known as variable recurring payments (VRPs). Unlocking recurring A2A payments powered by open banking is the critical next step towards delivering competition in retail payments.
It’s a key building block in creating a ubiquitous payment option that isn’t card-based. The next steps of open banking must also be more equitable for the banks, who provide critical infrastructure that supports A2A payments and should be properly incentivised to invest in its growth and evolution. Banks receive an interchange fee when they process card payments.
They should receive something similar when they process A2A payments. Slow progress from regulators and a.