Voice of the Industry

The inevitable rise of Account-to-Account payments

Wednesday 17 November 2021 14:40 CET | Editor: Anda Kania | Voice of the industry

With an unmatched banking network and consumer reach of over half a billion, Trustly has a unique view of why consumers across the globe are choosing fast and flexible digital payment methods and why merchants should pay close attention to this shift in behaviour. Trustly’s VP of Partnerships, Ciaran O’Malley, breaks down why

People’s evolving relationship with banks

Challenger banks, Personal Finance Management apps, the gamification of savings – these are just a few of the things that are expanding the way people interact with banks. More and more, people use their banks for other services, including Account-to-Account payment services that bring convenience and flexibility. They’ve also come to expect digital experiences that are curated and personalized. In this new, pandemic-influenced world of digital commerce, consumers expect speedy, secure, and convenient payment experiences. There is no going back to greater friction.

The fast and the flexible

Account-to-Account payments (or Online Banking Payments) that use a consumer’s bank login to authenticate the user is a natural progression for multichannel purchases in a post-pandemic world. For example, if someone wants to buy something online and pick it up in-store, flexibility when it comes to payments is crucial. This is also the case if goods are delivered to your home and you pay for what you keep, or for more experiential retail where different services in-store can be accessed. 

And when it comes to refunds when returning goods, Account-to-Account simply outperforms card payments. Instead of a refund taking several days to arrive after the returned goods have been received by the merchant, Account-to-Account refunds settle almost immediately. If consumers are offered instant money back, they will choose this so they can make new purchases sooner rather than later. This is a proven way to increase revenue and strengthen customer loyalty. 

The benefits of offering payouts in conjunction with Account-to-Account payment services are not limited to refunds. Customers of financial institutions such as lenders, investment firms or insurance companies often complain of slow payouts. These institutions, much like their E-com counterparts, spend massive amounts of time and money supporting these customers who are waiting for their funds. Fast payouts provide the opportunity for customer service to be removed (or at least reduced) from the customer journey – a huge differentiator that will surely sway the digital native.

A growing appetite for new digital payments 

There’s undoubtedly been an acceleration of the shift to more frictionless digital money transactions during the pandemic. Even Mastercard admits that the appetite for new digital payment methods is growing rapidly. Approximately 63% of global consumers have tried a new digital payment method they would never have tried before. In that same survey, 41% reported a preference for biometric checkout. Payments are increasingly merging with digital identity for ease of use, involving biometrics, which also eliminates identity fraud. 

What’s more, in our own survey covering 10,000 consumers across Europe, 53% of 16 to 24-year-olds said they prefer using fingerprint or face ID over entering card details for payments. That number amounts to 45% in the 25-30-year-old category. There are no errors with biometrics as opposed to, let’s say, entering the wrong bank card digits at the checkout, which then creates an unnecessarily disruptive experience for the consumer when attempting to fix the error. Not to mention the admin costs incurred for the merchant.

Growing globally with Account-to-Account

On top of admin costs, it’s important to note that fees are going up for credit and debit card payments. The cost of cross-border transactions is rising and regulations regarding Brexit and other issues haven’t helped. For businesses to expand globally, they need to be able to make frictionless transactions, not pay up to 1.5% or more for cross-border charges. Trustly, with a bank network of more than 6,300 banks and access to over 525 million consumers worldwide, is the undisputed leader in Account-to-Account payments and is powering the shift to a cardless society. By bypassing the traditional card rails, merchants can process payments that are up to 50% cheaper than card payments. Consumers will never pay a fee to use Trustly and can purchase from online stores (that offer Trustly in their checkout) outside of their own countries, no matter the currency. This is what is meant by ‘staying local to go global’. By offering local payment preferences, online businesses can extend their reach beyond borders and grow exponentially. 

For more on Trustly’s full-service, future-proof, cost-cutting, consumer-preferred payments solution, visit trustly.com.

This article is part of the Payment Methods Report 2021 – Latest Trends in Payment Preferences, a comprehensive overview of the payment methods in scope for 2021, as well as best practices for checkout optimisation and customer conversion by addressing digital transformation, security, and localisation.

About Ciaran  O’Malley

Ciaran is the Vice President of Partnerships, having joined Trustly as Head of Commercial Strategy in 2016. His team is responsible for Trustly’s relationships with Payment Service Providers, platforms, and other technical integrators. Alongside this, he has been involved in Open Banking in the UK and other industry initiatives such as SWIFT’s Pay Later API standard. 

About Trustly

Founded in 2008, Trustly is the global leader in digital Account-to-Account payments. Able to handle the entire payment journey, Trustly is unique from the competition. In 2020, Trustly processed over USD 21 billion in transaction volume across its global network. Trustly has over 600 employees across Europe and the Americas. 

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Keywords: account-to-account payment, online banking, Open Banking, payment methods, bank transfer, Trustly
Categories: Payments & Commerce
Countries: World
This article is part of category

Payments & Commerce

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