Can account-to-account payments overtake the credit card industry?
One of the main objectives of the five-year plan announced by the payment systems regulator (PSR) earlier this year was to examine how account-to-account or interbank payments could provide a credible alternative to card payments.
The regulator has refined its priorities in this area to clarify that good results for all interbank payments should include those initiated through open banking.
James Booth, PPro
According to PPro, there is huge potential for market disruption, with bank transfers accounting for just 6% of all online payments in the UK, while cards account for 52% of the market. James Booth, Head of Corporate Partnerships, EMEA, says most businesses and merchants are highly unlikely to receive account-to-account payments directly from consumers, as this would create a reconciliation nightmare.
“However, the adoption of wire transfer payments through open banking rails will continue to grow,” he says. “Instead of merchants offering this payment method directly, we will increasingly see bank-to-bank payments integrated into payment service providers and gateways allowing merchants to connect to consumers.”
In 2021, open bank payments increased by 500%, but the numbers are still small compared to the volume and value of card transactions
Louise Shorthouse, Icon Solutions
Peter O’Halloran, Head of Enterprise and Digital Commerce, EMEA, at Fiserv, said: “The potential for account-to-account payments is substantial and the growth trajectory of open banking transactions over the past two years shows traction. clarity and increased consumer and business adoption.