Open Banking
November 15, 2023
8 min

The Power of A2A Payment Technology


The basic concept behind a payment is that money transfers from one person to another. With cash, that’s easy. It gets a little trickier online since cards aren’t technically present when someone’s making a payment. Card-not-present (CNP) purchases can be complex, which is why so many banks and financial institutions are looking for ways to simplify them. 

One way to simplify online payments is to utilize Account-to-Account (A2A) payments. Read on to learn more about A2A payments, how they work, use cases, benefits, and how they fit into open banking. 

What are A2A Payments?

An A2A payment is a transaction that occurs directly between two bank accounts, circumventing the need for intermediaries such as credit card companies or third-party payment processors. Essentially, payments are transferred without an intermediary in between the accounts. It’s as simple and streamlined as a cash transaction but can be done digitally. 

When you make a traditional card payment, the business that receives the payment has to pay an interchange fee. It’s typically about 2–5% for every transaction done that way. When businesses utilize A2A payments, they can circumvent costly interchange fees and just accept the payment. That’s why, in the digitized era of financial transactions, A2A payments have emerged as a game-changer, signaling a paradigm shift in the way funds are exchanged. 

Types of A2A Payments

There are a few different ways A2A payments can be used, and each of these types can be described with an acronym. 


The rise of A2A payments can be particularly observed in the realm of peer-to-peer (P2P) transactions. P2P is simply when friends use payment platforms to exchange money quickly. Platforms such as Venmo, Cash App, and Zelle have become household names, revolutionizing the way individuals exchange money. These applications are quintessential examples of A2A payment systems, which allow users to transfer funds with just a few taps on their smartphones. 


Sometimes A2A payments are called “Me2Me” payments when it’s transferring money from one account to another, but both accounts are technically yours. That would include when businesses move money between two accounts at two different institutions under their business umbrella. Individuals can also move money from an account at one financial institution to another at a different bank. This is also called Payer-to-Payer transfers. 


Consumer-to-business (C2B) payments are when a customer uses an A2A payment to buy goods or services online or to pay a subscription service. So when someone signs up for a Netflix account, they might make C2B payments. A consumer might also do it when they buy something online. 


Business-to-consumer (B2C) payments happen when companies make A2A payments directly to individuals, such as auto-depositing staff payroll or sending customer refunds. 


Business-to-business (B2B) payments happen when one business pays another for services or products. This is common for B2B businesses that only market and sell products and services to other businesses. So, if a company wants to buy a piece of software, they would pay for that with a B2B A2A payment. 

How Do A2A Payments Work?

A2A payments can vary depending on which company is doing it, but the principle is the same. The payer will authorize the payment and agree to share secure financial data, and the money is moved. There are two ways an A2A payment can begin: “push” and “pull” payments. 

Push payments are initiated by the sender, who “pushes” funds directly into the recipient's account. This payment type is often employed in P2P transactions, where immediacy and control are essential. On the flip side, pull payments are transactions where the receiver “pulls” funds from the sender’s account, typically after obtaining explicit permission. This method is commonly used in recurring payments or billing scenarios, where the payee requires consistent access to the payer’s funds.

The “push” and “pull” categories apply to any type of A2A payment. So a company can make a B2B pulling A2A payment, or an individual can make a push P2P payment. Whether it's a P2P money transfer, a Business-to-Consumer (B2C) payment for goods and services, or a complex Business-to-Business (B2B) financial transaction, A2A payments provide a suitable and efficient method. This adaptability is one of the key factors driving the widespread acceptance and growth of A2A payment systems across diverse sectors.

The Benefits of A2A Payments

The massive growth of A2A payments can be attributed to the many benefits of using A2A. Here are a few of the A2A benefits: 

  • Heightened security. The direct nature of A2A transactions significantly reduces the exposure to fraudulent activities, a concern that often plagues traditional payment methods involving multiple intermediaries. In addition, A2A uses strong customer authentication (SCA) methods such as multi-factor authentication (MFA). This means they require the cardholder to authenticate themselves by providing two independent authentication factors—helping increase security for payments. 
  • More payment options. A2A payment technology offers a broader spectrum of payment options, catering to varying preferences and financial behaviors. For consumers who care about convenience and versatility, A2A payments allow a wider variety of apps and services to fit any situation.
  • Convenience. A2A payments simplify the transaction process because they perform immediate transfers without needing physical cards or cumbersome payment steps. In addition to that, the only requirement is a bank account. Customers simply log into their bank app to authorize payments—so they also don’t need to download additional apps or make new passwords. 
  • Cost-effective. Earlier, we mentioned that every card transaction is charged a 2–5% fee. That adds an extra cost for businesses. For example, if a customer pays $500, the business is charged $10. By eliminating intermediaries, transaction fees are gone, saving businesses money with their POS systems. If businesses are willing to share some of those savings, they could reduce some costs for their customers.  
  • Rapid processing. The rapid reconciliation and payment processing associated with A2A transactions ensures that financial operations are streamlined. Funds can reach a merchant in seconds when the money doesn’t have to travel through intermediaries. Even if it’s not instant, payments are still reconciled quicker than the traditional card process. 

Open Banking & A2A Payments

A2A banking didn’t used to be so popular — It used to be cumbersome to use A2A payments with bank authorization. Traditional A2A payments ran on legacy bank rails and the UX was tedious, manual, and slow. What changed? Open Banking. Open Banking is a system that mandates banks to provide third-party providers access to their financial data through Application Programming Interfaces (APIs). With Open Banking, A2A payments are not limited by bank rails. 

A2A payments can now operate freely in the Open Banking framework. The APIs created with Open Banking can connect a bank with third-party providers. That enables the direct movement of money from a payer’s account to a merchant—so long as it’s authorized. This means that A2A payments can now be made at the point of purchase instead of card payments, offering speed and convenience without excessive data entry or intermediaries adding to the cost of transacting.

Are A2A Payments Safe? 

One of the, understandably, biggest concerns with payments is security. After all, if a business isn’t secure and financial information is stolen, that can harm its reputation. Customers don’t trust companies who don’t use secure payment methods. So, are A2A payments safe? The short answer is that they are, but here are three reasons they’re secure: 

  • Bank-grade security. A2A transactions are routed to a customer’s bank account. Ultimately, that means that the bank is handling the transaction, not the company or individual. 
  • SCA. A2A payments use Strong Customer Authentication (SCA) and require authorization. Card payments also require authorization, but they’re done as part of the transaction, which slows down the payment process. A2A SCA is done through the banking app. That means the payment is authorized, and it processes faster. 
  • Greater control. Debit and credit card payment types will often save card information in the system, which requires sharing sensitive information with another party. With A2A payments, the secure information is exposed minimally, allowing for greater control of where the information is and who can access it. 

These three factors help make A2A payments secure, which allows businesses and consumers to feel confident when making payments. 

Why A2A Payments Are Growing

A2A payments are popular—and only continuing to become more prevalent. The burgeoning popularity of A2A payments is a reflection of the evolving demands of the financial services landscape. There’s a strong growing preference for integrated and user-centric financial solutions, and A2A payments fit the bill. In an age where immediacy and security are paramount, A2A payments have gained favor for their ability to offer a secure, cost-effective, and convenient alternative to conventional payment mechanisms. 

A2A also provides merchants more flexibility with Open Banking standards. By facilitating a payment through Automated Clearing House (ACH) rails, payment processing becomes more cost-efficient without sacrificing the consumer experience.

A2A’s adaptability across various transactional contexts, from casual P2P exchanges to complex B2B dealings, further cements their growing prominence in the financial transaction sphere. Essentially, A2A eliminates the hassle of traditional card payments, offers more options to customers, and makes the payment process seamless. Plus, there are no interchange fees. It’s no surprise that A2A payments are one of the most popular payment methods. 

The growth of A2A payments also indicates a larger trend towards digital transformation in the financial sector. As businesses and consumers increasingly seek digital-first solutions, A2A payments are a modern, efficient, and secure way to handle transactions. The increase in mobile devices and internet connectivity propels this shift. Everyone has instant access to more online stores and their banking information, which makes A2A payments convenient. Everyone has a phone and a bank, so everyone can make Venmo payments. A2A enables instant and accessible financial transactions for a broad demographic.

Furthermore, the rise of Fintech innovations has played a crucial role in popularizing A2A payments, offering user-friendly platforms that integrate seamlessly with users’ lifestyles and financial habits.

The Future of A2A Payments

A2A payments technology is anticipated to become an integral part of the evolving financial landscape, driven by ongoing innovations and a growing emphasis on user-centric financial solutions. It soon will be common for about 20–25% of e-commerce payments to use A2A payments. There may come a future where consumers don’t need to input their card information anymore; they’re just sent to their banking app immediately to authorize a payment to a merchant. 

The integration of A2A payment technology with Open Banking means more personalized, secure, and efficient financial services. Upcoming possibilities include multi-rail payment functionality, allowing merchants to efficiently process payments through ACH, FedNow, or Real-Time Payment rails. Payments can also be made more secure thanks to Open Banking Data pairing, allowing merchants to intelligently approve or deny payments in real-time.

Overall, A2A payment technology represents a significant leap forward in the realm of financial transactions. Its growth reflects a broader shift towards digitalization and efficiency in financial services, offering a glimpse into a future where financial exchanges are more secure, user-friendly, and integrated. To delve deeper into the transformative impact of A2A payments and their value proposition for consumers and businesses, explore further here.

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