Everything you need to know about A2A payments

A2A payments are account-to-account payments that move money from one bank account to another without using card networks. This A2A payments explainer is for EU merchants, PSPs, and fintech teams assessing whether the payment method fits their checkout and back-office requirements. The Capgemini World Payments Report 2025 projects that instant and A2A methods will rise from 16% to 22% of non-cash transaction volume by 2028, while cards will fall from 57% to 50%.

An A2A payment may use open banking for initiation and an instant payment rail for the transfer. However, the adoption of A2A payments still depends on supported banks, recurring-payment capabilities, refunds, reconciliation, and proof that funds have reached the merchant. The payments explained here do not guarantee universal coverage or lower costs under every provider contract for bank transfers.

Why European Businesses Are Moving Away from Credit Cards

Merchant costs often start the comparison. Interchange fees require merchants to review the complete card stack because scheme fees, acquirer pricing, and charges from payment processors can each affect the total. Traditional payment methods may remain suitable, but a merchant should compare live provider quotes before claiming lower costs from an A2A payment. Account-to-account payment systems do not use the Visa or Mastercard payment rail, which changes the quoted cost components rather than removing every charge.

The ECB report on card schemes and processors examines Europe’s reliance on international card infrastructure. SEPA Instant means eligible euro transfers have an EU instant-payment baseline, so account reachability and confirmed receipt become go-or-stop checks. Payment service providers help merchants choose suitable payment systems because coverage and reconciliation affect whether the A2A payment works in daily operations. Faster Payments provides a route for eligible UK transfers. When comparing A2A payments with credit cards, merchants should also consider refund requirements, payer coverage, and checkout completion for A2A payments vs credit cards for open banking payments.

How A2A Payments Work: Step-by-Step Flow

How do A2A payments work in open banking? The process connects the customer’s bank, a regulated payment initiation provider, and the merchant through the following steps.

Pay by bank → Select your bank → Continue to bank → Authorize payment → Payment rail → Return to merchant → Merchant confirmation

The A2A payment path from customer selection and authorization to merchant confirmation.

1. The Customer selects Pay by bank at checkout, chooses a financial institution, and is redirected to the bank’s app or website.
2. A PISP sends a payment-initiation request to the ASPSP, the payer’s bank, through bank APIs. These interfaces connect the regulated provider with the bank; if they are unavailable, the transaction cannot proceed.
3. The Consumer reviews the amount and recipient before giving consent, helping prevent unauthorized requests by making clear what the payer is approving.
4. The Bank applies strong customer authentication, such as a biometric check or PIN. This payment initiation step lets customers authorize payments directly without sharing card credentials with the merchant.
5. After authorization, the bank sends the funds through Faster Payments in the UK or SEPA Instant in the EU. The applicable clearing and settlement process moves them toward the merchant’s bank account.
6. The payer returns to the merchant, which matches the transaction reference to the order and checks for reliable payment confirmation. An initiation message alone does not confirm that funds have arrived.

The diagram distinguishes the bank’s authorization screen from the merchant’s confirmation of receipt. Merchants can integrate this payment flow through a gateway that supports bank transfer payments for payment initiation services.

Benefits of A2A Payments (Beyond the Obvious)

• Settlement speed: Eligible real-time payments can provide near-instant settlement when both accounts and the selected rail support it. Faster access to funds can improve cash flow, reduce working-capital pressure, and simplify reconciliation. Finance staff should still verify receipt before releasing high-value goods because an on-screen success message may describe only initiation.
• Fraud exposure: A2A payment authentication reduces reliance on card credentials, although authorized push-payment scams remain possible. Fraud risk means the merchant should check beneficiary details and reimbursement rules before approving the payment method.
• Less card-data handling: Customers can make payments directly from their bank, reducing card-data exposure without removing security and privacy duties. Bank account authorization does not prove that a transaction settled successfully.
• Potential lower costs: An A2A payment may avoid card interchange and scheme layers. Actual lower costs depend on third-party pricing, transaction value, refunds, and the merchant’s contract.
• International reach: Eligible A2A transfers may cross borders within a supported scheme. Merchants must check currency, institution participation, and return procedures; SEPA covers eligible euro transfers, while Faster Payments handles domestic sterling rather than global payments or ACH transactions for international payments.

Types and Use Cases of A2A Payments

The main types of A2A payments differ according to who initiates the transfer, which rail carries it, and whether the payment is one-time or recurring.

• Instant payments: This A2A payment method sends funds across an instant rail. Operators must distinguish successful initiation from final bank receipt before fulfillment.
• Push payments: The payer instructs a bank to transfer funds. This model suits e-commerce Pay by bank when the financial institution is supported, and open banking PIS operates under the Payment Services Directive (PSD2).
• Pull payments: The merchant begins collection after receiving the required consent. Direct debit is established for bill payments and subscriptions, while variable recurring payments let UK customers authorize a regulated provider to initiate payments within agreed limits. FCA and PSR initiatives give this model regulatory tailwind, while SPAA supports consent-based account services in the EU.
• SEPA transfers: These A2A transfers support eligible cross-border euro payments between reachable accounts in the SEPA area. A UK merchant can use this route when the transaction is denominated in euros and both the sending and receiving financial institutions participate in the relevant SEPA scheme; UK domestic sterling transactions use Faster Payments.
• Peer-to-peer transfers: Peer-to-peer and P2P payments move money directly between individuals’ accounts. P2P services do not automatically support commercial use. A marketplace must check payee identity, reconciliation, safeguarding requirements, and whether its provider permits the intended transaction type.

The appropriate A2A payment model depends on consent, timing, and rail reach. One-time checkout, recurring collection, and P2P use each have different authorization and recovery requirements.

Fit and Failure: When A2A Payments Don’t Work

Recurring payments

A2A payments limitations are clearest in subscriptions, refunds, bank coverage, and point-of-sale use. Recurring payments require repeatable consent, cancellation, retries, and recovery controls. Subscription merchants should retain cards or direct debit unless the chosen provider supports those functions. Variable recurring payments are developing in the UK with FCA and PSR support, so operators must check current bank reach rather than assume availability.

Refunds

A refund requires a separate merchant credit because an irrevocable push transaction lacks an automatic card-style chargeback. Staff should verify the beneficiary, prevent duplicate repayment, and match the new transfer with the original A2A payment.

Bank coverage

Open banking requires the payer’s institution and the relevant interface to be available. Unsupported banks, API faults, and outages require another payment method. RT1 and TIPS reachability may also affect whether an eligible A2A payment can complete.

Point of sale

Bank selection, redirection, and strong customer authentication can make an A2A checkout slower than a contactless tap. The exact delay varies by bank, device, connection, and authentication method, so merchants should test the complete flow rather than rely on a fixed timing estimate. Transit, queues, and impulse purchases can be poor fits when added delay increases abandonment or creates failure cases.

A2A vs Card Payments: Cost and Fee Structure

The brief’s estimates range from 0.3% to 3% for cards and 0.1% to 0.5% for A2A payment acceptance, subject to contract and transaction mix. The BIS analysis of competition in retail digital payments offers market context rather than a merchant quote. A2A payment acceptance bypasses Visa and Mastercard rails, changing which transaction costs appear rather than guaranteeing one price for merchant fees.

A2A vs. Card Payments: Industry-Specific Comparison

This industry comparison considers each sector’s payment needs, fees and settlement timing, checkout friction, and the process for refunds for user experience.

UK vs. EU: Adoption and Regulatory Differences

UK and EU A2A payment markets differ in their rails, adoption, and regulatory environment. Faster Payments gives UK open banking checkouts access to a domestic sterling instant rail. Merchants should still check supported banks and how each provider confirms and reports a completed transaction.

In the UK, the FCA and PSR provide regulatory tailwind for variable recurring payments, aiming to broaden consent-based recurring account payments beyond initial use cases. In the EU, PSD3 and PSR build on PSD2, while the SEPA Payment Account Access (SPAA) scheme defines premium account-access services. Merchants therefore need to compare provider coverage, consent models, recurring-payment support, and compliance requirements across the two markets.

SEPA supports eligible euro transfers, but merchants must confirm institution reach and transaction status before offering an A2A payment in a given market. Reported adoption examples include Amazon UK Pay by bank and eBay working with TrueLayer. Wero and cooperation involving Bizum, MB Way, and Vipps pursue wallet interoperability over SEPA infrastructure rather than creating another card scheme for UK regulation.

What Happens Next: Three A2A Predictions for European Businesses

The future of A2A payments in Europe will depend on recurring-payment coverage, checkout adoption, and consumer protection.

1. UK VRP could become mainstream by 2027. Variable recurring payments enable businesses to make consent-based collections. Adoption will depend on bank coverage, consumer uptake, and operational support.
2. E-commerce use may grow through 2030. Merchants may expand A2A payment adoption to reduce payment costs where institution reach, checkout design, and confirmation are reliable. Cards are likely to retain an advantage for impulse and low-ticket purchases because of their familiar, rapid checkout experience.
3. Industry protection could emerge by 2026. Consumer protection requires clear fraud, liability, reimbursement, and dispute rules because weaker recourse can constrain adoption. European merchants will need workable safeguards before making A2A acceptance a default option. These protections will shape future adoption across Europe as open banking Europe develops for A2A adoption.