the rise of account to account payments
06 October 2022, 9:12 (CEST)


The rise of account-to-account payments – a new payment future is upon us!

Worldpay recently predicted that over 20%1 of e-commerce transactions in Europe will use account-to-account (A2A) payments by 2023, and the figure is forecast to surpass 40% in the next five years. The reason is clear: A2A payment solutions are more cost-effective than alternatives, offer improved cash flow, and are well adapted to the kinds of subscription models businesses are increasingly adopting. That’s why more and more PSPs and merchants are adopting A2A payments to meet their needs.


  • Payment trends and what drives them
  • The maturity of Open Banking and APIs
  • Meeting the needs of the subscription economy

Payment Trends and What Drives Them

From gold coins to paper money, cashiers cheques to credit cards, new technology always replaces the old. Payment cards have been commonplace for decades, but consumers’ needs have changed, and cards are increasingly being superseded by a new generation of payment methods. To understand why, there are three trends to consider:

#1: Going contactless

The reliance on physical bank cards to make payments is losing its appeal, and the last decade has seen the appearance of revolutionary new payment solutions like Apple Pay. The Covid-19 pandemic also played a significant role in the adoption of contactless payments, with the value of contactless payments rising from 80.5bn in 2019 to 165.9bn3 in 2021. Consumers are less inclined to rely on intermediaries between merchants and banks, which is promising for the account-to-account payments outlook.

#2: Convenience

The global subscription e-commerce market almost doubled to $120.04bn between 2021 and 2022, and is predicted to grow to $904.2bn by 2026.4 Subscription models provide stable revenue for businesses and convenience for customers who don’t want to input their details for regular purchases. But traditional payment cards pose a problem: each time they expire, new details must be added and the smooth flow of commerce risks being interrupted. Account-to-account payments remove the need for inputting new details, providing consistent revenue and a faultless customer journey.

#3: Security

Fraud has always been a serious concern when it comes to payment cards, and the problem hasn’t been solved. The card industry faces $400bn in losses5 this decade due to fraud, affecting millions of consumers and businesses worldwide. A2A payment methods include features like multi-authentication, risk engine technology, and amount limits. With built-in credit checks, merchants can also avoid failed payments due to insufficient funds or compromised accounts, mitigating accidental risk as well as fraud.

These trends explain why payment cards are increasingly falling out of favour, but for a fuller understanding of what’s to come, we need to look at what’s arrived to replace them.

The maturity of Open Banking and APIs

When the nuts and bolts of a given industry or service have been worked out, businesses will often distinguish themselves with their ability to provide greater convenience. As a result, convenience is something most modern consumers have come to expect.
Technologies such as Open Banking and APIs are increasingly overtaking traditional payment systems precisely because of how easy they are to use. APIs facilitate instant one-time or recurring payments, eliminating the need to re-enter details or charge transaction fees and benefit both consumers and merchants who want to keep their business.
The number of active Open Banking users reached 6 million in the UK this year, and while Europe is generally lagging behind, the market is maturing.6

As Open Banking is adopted in Europe, more and more third parties will be able to initiate payments on behalf of consumers as a registered PISP (payment initiation service provider). As card interchange fees rise, and people look to more cost-effective alternatives, the speed, convenience, and security of account-to-account payments may well see them surpass cards as the payment method of choice in coming years.

Meeting the needs of the subscription economy

The significance of subscription-based commerce for the future of payments can’t be overstated. UBS Wealth Management recently reported7 that the subscription economy will be worth $1.5 trillion by 2025, more than doubling in size since 2020. A main driver for this is convenience, but many end-consumers are also attracted by the manageability of low monthly costs as opposed to an up-front fee. In software, for instance, a professional video-editing suite that might have cost $3,000 to licence upfront can now be accessed for a relatively affordable $100 a month.
In short, the rise of the subscription-based economy continues to penetrate the daily lives of European end-consumers, benefiting both them and the merchants that sell the product/service.
Recurring billing, offering predictable revenue
Better return on customer acquisition costs
Greater likelihood of earning more through cross- and up-selling
But to make subscription-based offerings convenient, they need to be simple, quick and easy to access. This is where ease of payment comes in. Account-to-account payments are especially well suited to subscription models because they provide a “request once, use many” approach. End consumers get easy access to the services they want without having to keep track of payments or update their details.

In summary

The payments industry is preparing itself for a “cardless” world. Based on catalysts such as Open Banking, APIs, and increasing business subscription models, change is inevitable, and the trend is towards A2A payments.
But to benefit from these market changes, merchants will need to decide which A2A payment provider best fits their current and future business model, and PSPs will need to have a deeper understanding of the gaps in their payments infrastructure. To successfully prepare for the future, it’s important for all players to understand which payment options they need to stay relevant, while at the same time improving the customer experience. Click here to find out more about SEPAexpress, part of The Banking Circle Group, trusted by over 34 countries and 500,000,000 bank accounts.

1 FIS: The global payments report. [online] [14.09.2022]

2 NUAPAY: Nuapay data reveals strong consumer demand for Open Banking and better a payment experience. [online] [14.09.2022]

3 THE FINTEC TIMES – Pathe, Tyler: Thirty per Cent Rise in Contactless Spending Value Following October Limit Increase. [online]

Thirty per Cent Rise in Contactless Spending Value Following October Limit Increase

4 Forbes – Wertz, Jia: The Growth Of Subscription Commerce. [online] [14.09.2022]

5 PAYMENTSDIVE – Mullen, Caitlin: Card industry faces $400B in fraud losses over next decade, Nilson says. [online] [14.09.2022]

6 Sifted: The state of open banking in Europe — in 4 charts. Financial flop or banking bop? Where open banking really stands in Europe. [online] [14.09.2022]

7 UBS, Wealth Management – Global: Investing in digital subscriptions. [online] [14.09.2022]

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