A2A Payments: Basic Details & Trends

Now more than ever, businesses need to stay up to date with the latest payment processing technologies. A2A payments are an innovative new way to facilitate cross-institution payments electronically, a process that is becoming increasingly important for the payment processing industry in 2023 and beyond.

The world of online payments is evolving rapidly, and A2A payments are playing a major role in this. What exactly are A2A payments, and why should they matter for payment processing in 2023 and beyond?

What Are A2A Payments?

A2A stands for Account-to-Account and refers to an electronic transfer of money directly from one bank account to another. This kind of payment system has been growing in popularity as it offers a number of advantages over traditional payment systems.

There are two types of A2A payments: push and pull.

Push payments are payments initiated by customers “pushing” their money into a company’s account. These are sometimes triggered by APIs and most often are used for one-off transactions or non-automated subscription payments. This is a more manual process.

Pull payments are payments pulled from the payer (or customer) account by a company automatically. Pull payments are most often used in situations where customers give prior consent to have a subscription payment come out of their account automatically.

A2A payments are transmitted in a few different ways: standard ACH, same-day ACH, wire transfers, and RTP (real-time payment) network transfers.

These push and pull payments can be further broken down by the type of payor and payee:

  • Peer-to-Peer: P2P payments include transactions carried out between the bank accounts of two individuals, usually family or friends.
  • Consumer-to-Business: C2B payments are paid by an individual to a merchant.
  • Business-to-Consumer: B2C payments include money sent from a business to an individual, like wages or refunds.
  • Business-to-Business: B2B payments include money sent from one business account to another for products or services rendered.
  • Me-to-Me: These payments are made from an individual to themselves, often to move money from one financial institution to another.

Benefits of A2A Payments

A2A transactions are predicted to make up 20% of global e-commerce payments by 2023, according to a FIS 2020 Global Payments Report.

Every payment type has its benefits. Here are some of the top benefits of using A2A payments:

  • No intermediaries: you don’t have to reach out to or work through a third party to complete transactions or collect and send payments.
  • Improved client reach: with A2A, it’s very easy to expand market share beyond a physical storefront or local customer base.
  • Better conversion rates: there’s no need to fill out checks or mail in a payment, you can use the smartphone or computer sitting in front of you.
  • Instant settlement: RTP transactions allow the transferred funds to be available immediately, and ACH can be done the same day or take, at most, 3 working days to have the funds available in the recipient’s account.
  • Lower transaction costs: Buying checks and processing credit card payments come with extra costs and fees. With A2A, there’s no third party to include in the transaction.
  • Better security: most A2A payment systems require MFA (multi-factor authentication) to use them, and this greatly decreases the chance that your money will be lost or stolen.
  • Payments that are frictionless: Easily send money from web browsers, apps, and more from your preferred device, all without having to memorize and retype bank account or card numbers and information.

What Is Driving A2A Expansion Today?

A2A transactions are predicted to make up 20% of global e-commerce payments by 2023, according to a FIS 2020 Global Payments Report. It made up only 13% in 2021. That’s quite a jump. So, what is driving A2A expansion today?

One of the biggest drivers is the global embracing of open banking practices. Instead of working with specific banking networks to facilitate payments, consumers and businesses can now initiate and carry out these transactions through APIs. Since financial data can be shared between banks and third-party service providers, it creates more avenues for customized payment options.

There is also the myriad of benefits we listed above that make A2A expansion extremely appealing.

Mobile wallets and the rise of contactless payment options are also spurring the A2A growth trends. The safety and convenience of these modern payment processes can’t be ignored. According to the 2022 AFP Payments Fraud and Control Report, 66% of organizations were affected by check fraud, but only 5% of those surveyed were targeted through A2A payment processes (like RTP and same-day ACH).

Another expectation for the future of A2A payment offerings is the demand for them. Most consumers around the country say they want faster payment access, and faster access to funds being sent to their accounts.

A2A is a great solution to the long-time problems that accompany wire transfers and other transactions that take place on an international level.

Wires are often expensive, reserved for specific transactions, like international payments, and can be a pain to sort out of something goes wrong. Since these transfers are also often used for large amounts of money, business and individual bank accounts don’t always take or receive the money right away, and the wait for those funds can be pretty lengthy.

As the A2A payment rails and system become more widespread, we will begin to see better access to payment data and faster movement of funds to and from accounts. A recent PYMNTS survey found that 85% of the respondents (500 financial executives surveyed) have already adopted or are intending to adopt RTP by 2024.

Faster and More Convenient Payment Processing is the Way of the Future

ReliaFund is your go-to, all-in-one platform that can help you organize your payments and keep your processes efficient no matter how your customers choose to pay you (or each other).

If you are looking for A2A payment capabilities, ReliaFund’s ACH services will assist you in processing payroll, subscriptions, memberships, and more. You have the option to set up recurring payments, too.

We want to help you consolidate all your payment data into one easy-to-use platform so you can keep your books straight and your business growing.

Reach out to us today for a free analysis.