A2A payments empower PSPs to overcome traditional payment restrictions such as card limits, enabling larger transaction amounts and reducing the risk of declines. Incorporating A2A payments also facilitates use cases such as digital invoice payments, recurring payments, and future-dated payments, expanding the range of customer services. This diversification meets current market needs and positions PSPs for future growth and enhanced service delivery. For merchants, A2A payments, including Open Banking, can reduce transaction processing costs by eliminating interchange and card scheme fees. Working capital is also improved through faster access to funds and avoiding the high uncertainty, cost, and administration of chargebacks.
One of the many benefits provided by A2A to users includes a fully online experience, consistent across all channels. Consumers can pay from their banking environment, safely and securely, and anyone with a bank account can initiate transactions using their online banking app. Consequently, over 75% of users who try A2A payments choose to use them again. Beyond payments, Embedded Finance will enable advanced use cases to serve payers better. By addressing existing pain points, PSPs can showcase A2A payments’ convenience for the payer and encourage adoption, whilst merchants can incentivise their consumers.
One of the primary challenges for A2A payments is the need for PSPs to embed them into their current portfolios fully and include additional features to match the standards of established payment methods. PSPs must ensure that A2A payments offer a seamless user experience comparable to other payment options. Additionally, consumers increasingly demand instantaneous payments, significantly challenging the limitations of SEPA Instant Credit Transfer, which will be largely overcome with the Instant Payments Regulation. Key challenges for merchants include the multitude of existing A2A payment schemes and their lack of interoperability. Each scheme requires separate integration and multiple contract negotiations. Dispute processes vary considerably or lack altogether, creating confusion and adding complexity. Poor implementation of A2A transactions can worsen user experiences. Regulators are key in addressing these challenges. Other challenges include funds reconciliation difficulties and the need to add a new payment provider if the wrong strategic choices are made.
Globally, expedited merchant adoption has been seen in India, China, and Brazil. Within Europe, Poland, the Netherlands, Sweden, and Norway are leading. Merchants with high average transaction values or players from the financial services, government, or high-risk sectors are early adopters. Rapid growth is also predicted for the retail, hospitality, and transportation industries. Merchant acceptance will surge once the current Open Banking gaps are addressed and consumer demand increases.
The Instant Payments Regulation (IPR) is a new EU legislation requiring all PSPs to enable sending and receiving EUR payments within seconds, 24/7, across the EU. Both payers and payees expect instantaneous transactions, which current A2A payment systems struggle to deliver consistently. By implementing the IPR by the end of 2025, A2A payments growth is expected, as it enforces the ability to make instant transactions, meeting the market’s high demand for immediacy. Consequently, the reliability and attractiveness of A2A payments will increase, leading to broader adoption and growth. Variable Recurring Payments (VRPs) are expected to increase the percentage of purchases completed via A2A. This includes subscription payments and repeat purchases with varying basket sizes. VRPs will accelerate the migration from card payments to A2A and become a modern replacement for direct debits.
We ensure that all our European customers can leverage A2A payments, and we assist PSPs in preparing for the growth in A2A payments by:
Technical excellence: connecting to 3,500 banks in 21 European countries, enabling PSPs to manage increased transaction volumes effectively, with a proven track record of heavy traffic reliability;
Payment chain expertise: supporting PSPs in integrating various use cases, such as proposing an end-user interface that simplifies the complexity generated by the heterogeneity of banks;
Enhanced payment ecosystem: leveraging strong relationships with banks and regulatory bodies to actively address key challenges like security, interoperability, and customer experience, shaping a more efficient and secure payment landscape for PSPs.
Worldline offers merchants multiple payment acceptance solutions and services, including our Bank Transfer payment service using the power of Open Banking. These payment acceptance solutions are fully integrated into an end-to-end value chain that includes collecting, reconciliation, and settlement processes. With extensive A2A processing experience, we are well-positioned to guide merchants on the appropriateness of each payment method, the regulatory landscape, best practices, and ways to optimise UX and reduce costs.
This editorial piece was first published in The Paypers' Unlocking the Potential of A2A Payments Report 2024 – Changing the Way We Pay and Get Paid, which taps into the fast, ever-expanding A2A payments industry, being the ultimate source of information for businesses looking to grow their consumer base.
Clement Jozwiak is the Chief Product Officer at Worldline Financial Services, leading product development across Europe. He has over 15 years of experience in digital and payment services. Focused on product innovation, he has worked with financial institutions, specifically in areas like digital banking, authentication, digital currency, and Open Banking.
Frederic Frizzarin is Head of Pre-Sales, Merchant Services, at Worldline. He has over 20 years’ experience in the IT and Telecoms industry and prior to Worldline’s acquisition, spent over 10 years working in payments at Ingenico. Frederic started as a Solutions Manager, before moving into a Pre-Sales Manager role, and more recently Head of Pre-Sales. He is adept at leading and managing complex solution sales within Tier 1 and Tier 2 UK Retail markets and is responsible for identifying needs, developing appropriate solutions, defining value strategies, preparing proposals, and managing bid responses.
Worldline helps businesses of all shapes and sizes to accelerate their growth journey – quickly, simply, and securely. With advanced payments technology, local expertise and solutions customised for hundreds of markets and industries, Worldline powers the growth of over one million businesses worldwide. Worldline generated EUR 4.6 billion in revenue in 2023.
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