Visa has announced the launch of Visa A2A, an open system designed to modernise account-to-account (A2A) payments.
Set to debut in the UK in early 2025, this new offering promises to bring enhanced consumer control and protection to bank transfer payments, addressing longstanding issues in a sector that has seen little innovation since the inception of direct debit six decades ago.
Visa: Meeting the growth of A2A payments
The launch comes at a time when A2A payments are experiencing significant growth in the UK. In 2023, A2A Faster Payments in the country reached £3.7tn (US$4.87tn), marking a 15% increase from the previous year.
Despite this growth, the process of paying bills and managing subscriptions through bank transfers has remained largely unchanged, often relying on manual processes and offering limited consumer safeguards.
Mandy Lamb, Managing Director of Visa UK and Ireland, explains: “We want to bring pay-by-bank methods into the 21st century and give consumers choice, peace of mind and a digital experience they know and love.
“That's why we are collaborating with UK banks and open banking players, bringing our technology and years of experience in the payments card market to create an open system for A2A payments to thrive.”
Visa A2A aims to address several key pain points in the current A2A payment landscape. The system will introduce a formal dispute resolution process, providing consumers with a reliable way to query transactions. Enhanced security features, including biometric authentication, are expected to reduce unauthorised transactions.
Visa A2A: Increased payments control
One of the most significant improvements is the increased control Visa A2A will offer consumers over their payments. Users will be able to set up and manage payment permissions more easily, with the ability to set limit amounts to prevent unexpected financial stress from higher bills.
The introduction of Visa A2A is timely, considering the financial impact of the current system's shortcomings.
Industry data suggests that billions of pounds are lost or withheld from consumers due to issues such as unauthorised auto-renewals or the lack of flexibility around bill payments.
Visa's move into the A2A space is not without its challenges. The company will need to navigate a complex ecosystem of banks, fintechs and regulators to ensure widespread adoption and interoperability.
To this end, Visa is designing the system in partnership with leading UK fintechs, including Banked, Modulr, Moneyhub, Salt Edge, Vyne and Yaspa.
The open nature of Visa A2A is a key feature of the new system. By making it available to all eligible banks and industry partners, Visa aims to foster collaboration and drive innovation in the sector. This approach has garnered support from major financial institutions.
Otto Benz, Director of Payments at Nationwide Building Society ,says: “We know that businesses and consumers alike are keen to explore the benefits of A2A transactions, and we expect demand to increase in the coming years.
“The industry will need to collaborate on innovations such as Visa A2A if we are to put in place the necessary rules, capabilities and consumer protections that will unlock the full potential of A2A.”
The benefits of Visa A2A extend beyond consumers to businesses as well. The system's near real-time settlement through Pay.UK's Faster Payment System is expected to improve cash flow management for companies.
Additionally, the digital nature of Visa A2A will provide businesses with greater visibility over payments and more detailed transaction data for reconciliation purposes.
HSBC UK's Head of Everyday Banking, Pella Frost, adds: “We welcome an initiative that seeks to standardise the rules, capabilities and protections for customers using account-to-account payments.
“Visa is well placed to build on the growth we are seeing, and we look forward to seeing how it will work with the industry to create a secure and sustainable payment experience for the ecosystem.”
A2A to have big impact?
As Visa prepares to roll out A2A in early 2025, the payments industry will be watching closely to see how this new system impacts the broader fintech landscape.
The success of Visa A2A could potentially set new standards for consumer protection and user experience in digital payments, not just in the UK but globally.
Rob Levy, Director of POS Lending Products, Open Banking & Digital Platforms at Barclays, concludes: “We are supportive of initiatives that drive competition and innovation in A2A payments, and an industry-led scheme solution is one of the many ways to deliver this.
“We look forward to seeing how Visa may build on their payments experience to deliver value and protections for customers.”
