What are Account-to-Account (A2A) Payments?

A2A Payments are direct money transfers from one bank account to another bank account – without intermediaries. In the history of the payments sector, A2A Payments were only used when consumers settled bills via bank transfer or direct debit. However, nowadays A2A Payments play an increasingly significant role as an innovative and efficient payment method in various sectors, with broader application thanks to modern technologies like Open Banking.

What are the Two Types of A2A Payments?

  • Push Payments

    Push payments are one-time transfers of funds where consumers manually send money to merchants. APIs (Application Programming Interfaces) can also trigger push payments by sending notifications or prompts to customers.

  • Pull Payments

    Recurring payments, such as those commonly seen with subscriptions, are referred to as pull payments. These payments require prior authorization from consumers for funds to be regularly withdrawn from their respective accounts.

What are A2A Payments Rails?

Payment Rails essentially form a 'network' that enables smooth and secure A2A Payments. There is no standardized Payment Rails globally. However, within Europe, three Payment Rails support A2A Payments.

  • SEPA Instant Credit Transfer (SCT Inst)

    SCT Inst is a pan-European push payment standard that enables A2A Payments of up to €100,000 across international borders. The SCT Inst program aims to complete the payment processing and crediting of funds between two participating payment service providers (PSPs) within 10 seconds. In the EEA for instant payments, two systems compete, referred to as RT1 and TIPS. The latter is operated by the European Central Bank (ECB). Since January 2023, the SEPA region (Single Euro Payments Area) includes 36 countries in the Eurozone and Non-Eurozone, including the United Kingdom. Wero, EPI’s newly developed instant payment solution is gaining significance as a pan-European account-to-account (A2A) payment means based on SCT Inst and its digital wallet. It will initially support person-to-person (P2P) and person-to-professional (P2Pro) payments, followed by online and mobile shopping payments and then point-of-sale payments while combining them with attractive value-added services in the future.

  • Request-To-Pay (RTP)

    Request-To-Pay is a messaging service that prompts recipients to initiate a payment of a specific amount to other payees. The service can be seen as a layer of customer experience built on top of SCT Inst.

  • Mobile Peer-to-Peer Payments

    Mobile Peer-to-Peer Payments (abbreviated as mobile P2P or MP2P) enable instant transactions requiring only a mobile number or email address. Consumers can use P2P Payments to send money to a bank account without needing account details. Senders and recipients do not need to use the same banking service or app. Since 2012, Swedish bank customers have been utilizing the app Swish to facilitate mobile A2A Payments through their mobile phones. Initially designed for transactions between individuals, Swish quickly gained popularity and became the most favored online payment method. Other examples of popular A2A payment apps include MobilePay in Denmark and Finland, Vipps in Norway, as well as Alipay and WeChat in China.

How Does It Work?

With the introduction of Open Banking, APIs (Application Programming Interfaces) allow non-banks, such as Third-Party Providers (TPPs), to securely access bank accounts and initiate payments on behalf of customers. Instant A2A Payments are enabled by Payment Initiation Services (PIS). PIS providers are regulated financial institutions authorized to initiate payments on behalf of their customers. If consumers want to make a real-time A2A payment or choose the "Pay by Bank" option at checkout, this must be done through a PIS provider. Since 2018, many Open Banking-based TPPs have become available.

  • Step 1

    Regardless of whether it's a bank or a non-bank, consumers must first grant a Payment Initiation Service (PIS) provider or TPP access to their own bank account. This authorization typically occurs through a straightforward online process.

  • Step 2

    Subsequently, the payment is initiated through the PIS provider or TPP. This can be done, for example, by clicking the "Complete Purchase" button on a website.

  • Step 3

    Consumers then authorize the payment through the respective bank's API. To ensure the highest possible security for consumers, a process is typically followed (such as two-factor authentication) to confirm the payment. Once the payment is authorized, the money is immediately transferred from the consumer's bank account to the merchant's bank account.

Learn with reMonetary

Our courses provide invaluable insights into the diverse payment systems that underpin A2A payments.

  • $50.00

    Payment Systems and Bank Transfers

    Explore different payment systems and their unique features, including a detailed examination of a popular payment system. This analysis will focus on its bank transfer instruments, such as credit transfers and direct debits, which form the backbone of many Account-to-Account (A2A) payment systems.
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  • $50.00

    Financial Messaging

    Financial messaging using ISO 20022 plays a crucial role in facilitating Account-to-Account (A2A) payments by providing a standardized format for exchanging payment-related information. With this course, you will learn how messaging standards work using the ISO 20022 standard and how mapping of different messages across standards works.
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