Expert in the field of international financial law Konstantin Kryvopust talked about A2A payments and general market trends.
The global payment landscape continues to develop dynamically. Even a decade ago, payment methods like digital wallets, BNPL and contactless payments were little known or non-existent. One potentially transformative trend is also the rise of account-to-account (A2A) payments.
A2A payments dominate in India, Poland and the Netherlands, but remain a secondary payment method in the largest markets such as China, Japan, South Korea and the US. Which A2A schemes have been successful and why? And what awaits payments from account to account next? More on this below.
What is the point of A2A payments?
A2A payments are money transfers that are made directly from one account to another without intermediaries such as card networks. More often than not, A2A payments are instant.
Well-known bill-to-bill payment systems such as Pix in Brazil, iDEAL in the Netherlands and BLIK in Poland dominate payment methods in their respective markets and are used for payments in mobile applications, online stores and POS terminals. A2A is already widely used between individuals (P2P), enterprises (B2B), users and businesses (P2B), and governments (P2G, G2P). IN research “The Global Payments Report 2023” of fintech company FIS notes that 70 real-time payment systems will contribute to the growth of A2A payments in the world.
Also driving growth are bank consortia in Argentina (Modo), Singapore (PayNow), Spain (Bizum), Denmark and Norway (Vipps MobilePay). Private fintech companies are using open banking initiatives and open APIs to build successful A2A tools such as Trustly, Sofort and Volt.
Are A2A payments popular in the world?
According to the Global Payments Report 2023, the volume of account-to-account payments in e-commerce alone was approximately $525 billion in 2022. A2A payments are expected to grow by 13% annually through 2026.
One of the reasons for the popularity of A2A payments is the lower cost of the transaction, especially compared to card payments, because transfers are made without the involvement of intermediaries who receive a commission. Also, A2A payments are often instant, simple and secure.
A2A payments are today the leading online payment method in Finland, Malaysia, the Netherlands, Nigeria, Thailand and Poland. Recent studies predict that they will soon become so in Brazil. As we can see, these are mostly markets where the card culture has never dominated among consumers. Moreover, the latter mostly did not use banking services. In these countries, A2A payments are now rapidly changing the payment landscape while making huge strides in promoting financial inclusion.
The most famous systems of instant payments from account to account in the world
Pix was launched by Brazil’s central bank in late 2020 and has quickly become one of the most used tools for money transfers and payments for purchases, as it offers mostly free transactions with instant settlements. In particular, between October 2021 and October 2022, the number of P2B (user-to-business) transactions in the Pix system increased from 152 billion to 472 billion. And the share of Pix payments in Brazilian e-commerce doubled from 12% in 2021 to 24% in 2022. According to the new forecastsPix will overtake credit cards in the local e-commerce market next year with a share of 44% versus 41%. Recently it became known that Pix in cooperation with Wipay and PayBrasil launches instant payments in Europe – the service will be launched in Spain and Portugal before the end of the year.
In Peru, Yape and PLIN are private banking systems that are facilitating the growth of A2A payments. Yape is operated by Peru’s largest bank BCP, while PLIN is a joint service between BBVA, Interbank and Scotiabank. Thanks to the success of Yape and PLIN, the share of account-to-account payments in Peru’s e-commerce market has skyrocketed from 9% in 2021 to 17% in 2022 and is forecast to reach 28% in 2026.
In India, the Unified Payments Interface (UPI) was launched in 2016 by the National Payments Council of India (NPCI) and the Reserve Bank of India (RBI). The success of UPI is largely due to its full compatibility with popular digital wallets. You can make payments using UPI both online and via QR codes. This has helped increase the share of digital wallets in India’s e-commerce to an impressive 50% in 2022.
In Thailand, PromptPay is a key component of the government’s initiative to transform the country’s financial infrastructure. PromptPay has helped make instant bill-to-bill payments the leading online payment method in Thailand, accounting for 42% of local e-commerce transactions in 2022 (up from 38% in 2021).
The BLIK payment system in Poland was launched in 2015 by six Polish banks with the aim of simplifying and speeding up money transfers. Currently, BLIK is supported by 18 Polish banks, and the number of users reaches 13 million every month. As of the end of last year, 70% of transactions in Polish e-commerce were carried out using BLIK. This year BLIK announced about international expansion. The first launch countries outside the homeland will be Slovakia and Romania, followed by other EU countries.
Prospects of A2A payments in Ukraine
Already in the first quarter of 2025, instant payments will become mandatory for all Ukrainian banks, and integration with EU instant payments (SEPA) is planned for the second half of the same year. The regulator expects that instant payments will make it possible to reduce the cost of payments for users, contribute to the development of the payment services market and increase competition, have a positive effect on the level of financial inclusion, and also contribute to the growth of Ukraine’s GDP due to the instant movement of funds.
In general, banks consider instant payments from account to account as an analogue (and possibly a replacement) of card transfers, an alternative to classic acquiring, as well as a tool in e-commerce. The main advantage, of course, is the reduction of transfer costs, which is also of interest to traders. However, the prospects for instant payments in Ukraine depend on creating a unified user experience and improving financial literacy.
