Gabriel Lucas, Director of Redbridge Debt and Treasury Advisory, looks into the convergence of instant payments and Open Finance overlay services as a catalyst for A2A payments. Originally published in the Paypers.
Account-to-account (A2A) payments offer merchants tangible benefits: real-time settlement, reduced transaction fees, and greater control over cash flow. Yet global adoption remains limited, even with very well-established infrastructures like SEPA Instant in Europe, the more recent FedNow or RTP from The Clearing House in the US, and regulatory initiatives such as PSD2 and Open Banking.
On the other hand, notable exceptions like iDEAL in the Netherlands, UPI in India, and Pix in Brazil demonstrate that success is possible, but not easily replicated. In Europe, Wero and EuroPA are emerging as potential challengers to card dominance, and in the US, Fiserv launched Pay by Bank.
So, why haven’t A2A payments really taken off globally yet?
The consumer perspective: why switch?
While A2A payments are a clear win for most merchants, the value proposition is far less convincing for consumers. Payment methods like cards and digital wallets have built loyalty through added value, including benefits like cashback, rewards, insurance, one-click ease, or buyer protection.
By contrast, most A2A options are perceived as clunky, opaque, and less secure. They lack strong consumer branding, offer little or no protection in dispute scenarios, and often require multiple steps at checkout. Unsurprisingly, without a meaningful incentive or at least equivalent user experience (UX), consumers stick with what they know and may not even recognise A2A as an option at all.
The regulatory gap: PSD2 and beyond
PSD2 laid the foundation for secure API-enabled A2A payments but failed to address critical factors like UX and consumer value. Banks, faced with limited commercial upside compared to the profitability of their established card businesses, have deprioritised investment in front-end payment innovation.
Additionally, the ban on surcharging – intended to protect consumers – removed a key lever for merchants to steer users toward cost-efficient payment methods like A2A. This regulatory misalignment has prevented merchants from actively promoting A2A payments, despite the considerable potential for reducing transaction fees. A powerful yet often overlooked solution still exists in Europe: incentivising A2A payments in a compliant manner, by offering discounts or rewards and delivering clear and meaningful value directly to consumers.
What merchants can do now – with or without regulation
Regulation can guide adoption, but merchants hold the real power to accelerate A2A usage, especially in high-ticket (luxury, electronics, travel) or low-margin (grocery, marketplace) sectors. Global merchants like Ryanair and Walmart show how proactive integration of A2A can yield both cost savings and customer engagement.
Practical strategies for merchants to promote consumer adoption include:
- Clarifying the benefit: make the value of choosing A2A obvious, with promotions like ‘Save X% when you Pay by Bank’.
- Building trust: reinforce security, emphasise refund and dispute policies, and use customer endorsements to normalise A2A usage.
- Streamlining the experience: embed A2A directly into checkout, eliminating redirects and enabling biometric logins and instant confirmations.
Open Finance: closing the gap
PSD3 and the Financial Data Access Regulation (FIDA) promise to standardise and expand financial data access, however, their true transformative potential lies in proposing consumer-facing innovations built on top of payment rails, also known as Open Finance overlay services. Services like real-time balance visibility, account aggregation, dynamic incentives, and instant refunds can bring A2A payments in line with, or even surpass, the convenience of cards with value-added services like offering personalised cashback or enabling secure one-click repeat purchases using account-linked data. For banks and fintechs, Open Finance isn’t just about compliance, it’s a chance to shift from infrastructure providers to experience creators. And for third-party providers, it opens the door to tailored A2A solutions for verticals like subscription services, travel, or even luxury retail. In this context, A2A becomes more than a payment method. It becomes a platform for differentiation and competitive advantage.
Final thoughts
Consumers don’t adopt payment methods based on lower merchant fees or infrastructure efficiency. They switch when the experience is better, the value is clear, or the incentives are stronger.
To fully unlock A2A’s potential, the ecosystem must shift its focus:
- from rails to rewards,
- from APIs to experiences,
- from cost-cutting to consumer value.
A2A can be a true game-changer, especially in price-sensitive, margin-tight verticals, but only if merchants take the lead, offering better experiences and passing part of the value on to users. Until then, A2A remains a sleeping giant: technically ready, commercially promising, but waiting for its breakout moment.
This editorial piece was first published in The Paypers’ Account-to-Account Payments Report 2025, which features insights into global trends, key players, partnerships, and the next phase of the A2A evolution. Access the full report to understand where the A2A payments ecosystem stands today and what’s next.