
By WendyGMartinez August 10, 2025
The way we pay is changing, and it’s changing quickly. Recently, there has been a clear movement from card networks to direct bank payments (A2A) because of the increase in A2A transactions all around the world. A2A works directly between bank accounts with no card payment intermediaries, leveraging open banking frameworks.
It has won traction across the EU, and over in the UK where clear Regulation working around open banking chips away at. The US is now catching up, as fintech platforms and banks are beginning to exploit Account-to-Account (A2A) rails for bill pay to e-commerce and beyond.
The appeal? Lower transaction costs, faster settlement, and better liquidity control for businesses. But while the benefits are clear, so are the challenges—particularly around consumer adoption, fraud protection, and refund mechanisms.
In this blog, we’ll unpack how Account-to-Account (A2A) payments actually work, why they’re gaining momentum, and what businesses should know before diving in. Are these new rails a smarter choice or just a riskier route? Let’s explore.
What Are Account-to-Account (A2A) Payments?
Account-to-Account (A2A) payments refer to direct bank transfers from a payer account to a payee account bypassing the traditional Visa/Mastercard/Amex rails. This avoids the middlemen and gives an overall faster, not to say more cost-friendly, solution for customers as well as businesses.

This frequency might sound high because you think of direct deposits only as money automatically landing in your bank account; but these types of payments have traditionally been used for rent, tuition, utility bills — and now even peer-to-peer transfers and e-commerce checkouts. The key difference? Funds are exchanged bank-to-bank rather than through a card processor.
Here’s how A2A currently works, which can differ by location and network:
- ACH (Automated Clearing House) – Common in the US for bulk transactions, however not real-time.
- SEPA (Single Euro Payments Area) – European and Eurozone countries for cross border-transfers and domestic transfers.
- Faster Payments (UK) — 24/7 real-time transfers between banks.
- UPI (Unified Payments Interface): The real-time system behind apps like Google Pay and PhonePe.
- FedNow / RTP (Real-Time Payments): New real-time A2A options in the US, providing instant transfers for all consumers and businesses.
Because the Account-to-Account (A2A) payment moves between financial institutions directly, this means lower fees and faster settlements. But their use is very infrastructure dependent, including evolving regulatory frameworks and user trust, across markets.
How “Pay-by-Bank” Rails Are Gaining Momentum?
Account-to-Account (A2A) payments are undergoing well-known re-branding and at the same time enjoying a refreshing marketing angle for consumers: “Pay-by-Bank. This term, of course, is a simplification of how things really work under the hood (no cards) and makes it more understandable to consumers as in a retail environment.
It is also being driven by a number of fintech players. Through secure APIs and user-friendly interfaces, Plaid, MX, Trustly and its transport layer Link Money, GoCardless FedNow and The Clearing House RTP are deploying real-time rails on the infrastructure side in the US, while established systems such as Faster Payments (UK) and UPI (India) are broadening their scope.
So why the momentum?
Merchants are incentivized to drive adoption as Pay-bank-Bank solutions can cost 30–70% less to process a transaction compared to a credit card. The added bonus? Quick settlement to optimize working capital and reduce chargeback risk.

Banks and regulators are also onboard. In the EU, PSD2 and Open Banking mandates require banks to provide API access to customer data and payments. The UK’s OBIE initiative has led to millions of successful A2A payments. This regulatory encouragement, paired with demand from banks for alternatives to card rails, is opening new pathways for secure, direct payments.
As these three elements around fintech innovation, merchant demand and increased regulatory pressure converge, Pay-by-Bank has come into its own, with Account-to-Account (A2A) infrastructure that can now serve real world commerce use cases.
The Pros of A2A Payments for Businesses
Account-to-account (A2A) payments boast a powerful array of benefits for modern businesses which are particularly relevant in the context of transactions involving high values or seeking to eliminate payment friction.
Lower Costs
Businesses avoid the high interchange or scheme fees as A2A payments bypass card networks entirely. Flat-fee or per-transaction charges are common among most A2A rails, which drops overall processing costs considerably. Hence, this makes sense for industries where high-ticket payments are being processed such as rent, tuition fees or very large invoices.
Instant or Same-Day Settlement
A2A transactions can now settle instantly or at best within a few hours, given the emergence of real-time payment infrastructure like RTP in the US, UPI in India (this is inter-bank but consumer fronted) and SEPA Instant in Europe. This improves liquidity and cash flow for merchants, unlike card payments which often involve 1–3 business days of settlement delay.
Enhanced Security and Lower Fraud Risk
Without card numbers entering the picture, A2A transactions take away a huge fraud target. Customers log in with their bank, most commonly through robust authentication protocols or biometric ID. It is end-to-end encrypted and lowers the chances of data breach or fraud.
Lower Chargeback Risk
Unlike card payments, A2A rails such as ACH or SEPA Direct Debit offer limited consumer dispute mechanisms. While this can be a downside for buyers, it’s beneficial for merchants—reducing costly chargebacks and simplifying dispute resolution.

Easier Recurring Payments (via Mandates)
Direct debit mandates for Account-to-Account (A2A) payments will be more reliable in the long run. Card-on-file arrangements can stop payments in case the card expires, whereas bank mandates have a longer validity period that smoothens churn rates for subscriptions or installment plans.
The fact remains that A2A payments offer savings in addition to the current operational and financial efficiencies associated with them. And as infrastructure grows and adoption continues to become widespread this will only increasingly benefit forward-thinking businesses.
The Cons and Risks of A2A Payments
Though Account-to-Account (A2A) payments offer several benefits, they also come with severe restrictions that business should keep in mind when thinking about adoption.
Lack of Consumer Protections
A2A payments do not usually offer chargeback rights as they do with credit cards. And for the consumer, if you have less buyer protections, then you are going to feel a bit more hesitant before agreeing to that e-commerce transaction. Moreover, a majority of A2A rails do not have real-time dispute resolution functionalities which can damage customer trust.
UX Challenges
Despite advances made the user experience, Account-to-Account (A2A) payments still has a long way to go before it becomes as slick as tapping a card or using Apple Pay. Customers might have to login into their bank portal, authentication via OTP or biometric and go through multiple screens. For mobile in particular this creates a lot of extra steps and is likely to increase cart abandonment
Risk of Irrevocable Errors
Many A2A systems especially real-time ones—don’t offer a “pull-back” option once a payment is sent. If a customer enters the wrong account number or routing code, the funds could be unrecoverable. For high-value payments, this lack of reversal capability poses serious risk.
Adoption Barriers in the U.S.
Although FedNow and RTP are pushing real-time payments in the U.S., adoption is still limited across banks and platforms. The dominant method, ACH, remains slow and batch-based. More importantly, American consumers are deeply habituated to cards and mobile wallets, making behavioral change a challenge.
Regulatory Hurdles and Fragmentation
Markets such as the EU and UK have had active open banking API regulatory mandates for some time. Meanwhile, the US has no unified scheme so integration of APIs is scattered and inconsistent. In Europe, the still-evolving PSD3 regulations with a lack of compliance and cross-border consistency.
In summary, whilst A2A has speed and cost benefits but against this business will need to balance that with UX friction, regulatory gaps, and potential trust complexities largely in regions where cards continue to dominate.
Is A2A Right for Your Business? Use Cases to Consider
A2A (Account-to-Account) payments are another weapon in your payment methods that can help you fight increasing churn, but they are definitely not a solution that you can use anywhere. It really comes down to how your business is modeled, the number of transactions and what types of customers you serve.
Great Fit For:
- A2A payments bring a low-cost, recurring revenue stream that utilities, telecoms and insurance companies crave; Account holders only need to set up a mandate once, and costs are rolled up into predictable, regular billing each month.
- B2B and invoices businesses prefer the quicker settlement and lower fees (esp on large invoices — you can have enterprise clients that use just every time.)
- A2A also provides a solution for high-ticket e-commerce players, such as travel, or they more traditional segments such as furniture and education due to savings on standard interchange fees with support of instant or near same-day settlement which allows for better liquidity.

Less Ideal For:
- Impulse-driven or high-speed retail environments, such as those where convenience and speed rule the day. Here is where a multiple card tap or digital wallets scan wins.
- For example, if you use chargebacks to establish trust with customers or solve customer disputes (like in apparel, cosmetics or subscriptions), A2A might be too direct.
- Older or less tech-savvy customers might struggle with bank authentication flows, especially when required to enter OTPs or navigate mobile banking interfaces.
Hence, A2A should not be a full replacement and instead a payment option. Offering it in conjunction with cards, wallets and BNPL will meet the varied customer preferences while enhancing efficiency at the back end.
Conclusion
Account-to-Account (A2A) payments are gaining ground fast, offering businesses a compelling mix of lower costs, faster settlement, and greater control. As open banking matures, “Pay-by-Bank” could become a mainstream checkout option—especially in high-value or recurring payment contexts.
But like any innovation, A2A rails come with trade-offs. Limited consumer protections, user experience friction, and fragmented regulations mean businesses should tread carefully. This isn’t a magic bullet that replaces cards—it’s a strategic layer in your payment stack.
If you’re considering A2A, start with a clear use case, test it with trusted customers, and work with payment processors that support secure, compliant bank transfers. The future of payments is real-time and direct—but it must be balanced with trust, usability, and flexibility.
Frequently Asked Questions
1. Are A2A payments safe?
Yes—most A2A systems use bank-level authentication and encryption. However, user mistakes (like sending to the wrong account) are harder to reverse than card errors.
2. Do A2A payments support refunds?
Some platforms support refunds, but they’re not as fast or seamless as card-based systems. Businesses should check refund tools with their payment processor.
3. Can I use A2A for recurring payments?
Absolutely. Direct debit mandates and standing instructions make A2A great for subscriptions, rent, tuition, and other repeat billing.
4. Why don’t more customers use Pay-by-Bank at checkout?
Many consumers trust cards and wallets. Plus, A2A flows can be more time-consuming due to bank logins and OTPs.
5. How do I add A2A payments to my business?
Work with a provider like Plaid, GoCardless, or Trustly. They offer plug-and-play APIs that connect with your existing checkout or billing system.