Understanding A2A (Account-to-Account) Payments

Push vs. Pull Payments

Push payments are usually one-off transactions that require the payer to manually send money from their bank account to the recipient's bank account. These transactions are initiated and authorised by the payer.

In contrast, Pull payments are initiated by the payee, who requests payment from the payer, and the payer authorises the payment from their preferred bank account. Direct debits are an example of Pull payments.

Main types of A2A Payment

Manual Bank Transfer

One popular way to make A2A payments is through manual bank transfers. To do this, the payer must log into their online banking portal and enter the account number and sort code of the payee. They must also provide a payment reference. Finally, the payer must manually authorise the transfer of funds to the payee's bank account.

Although this process is not automated, it remains a common option despite being time-consuming and less convenient than other payment methods.

Direct Debit

Direct debit is a Pull payment that allows merchants to collect recurring payments from their customers' bank accounts. This payment method is becoming increasingly popular in subscription-based services as payment can be automated, making payments hassle-free for both customers and merchants.

PIS through Open Banking

Payment Initiation Services (PIS) through open banking is a type of Push payment that enables users to initiate a payment from their bank account to a firm's bank account through a third-party payment provider. This payment method is facilitated by open banking and allows for a faster and more seamless transaction experience.

Benefits of A2A payments for businesses

Better coverage

A2A payments can be accessed by individuals who have a bank account. In the UK, this includes over 99% of people aged 15 and above, also referred to as the "banked population."

Reduced costs

Using A2A payments instead of card payments can save businesses money in transaction fees because A2A payments don't have typical charges such as authorisation fees, card terminal hire, and chargeback costs.

Instant settlement

A2A payments in the UK are typically received very quickly thanks to the Faster Payment Service (FPS). Most banks in the UK are part of the FPS, which enables instant transfers of A2A payments.

Reduced Fraud Risk

To reduce payment fraud and errors, many A2A payments now require multi-factor authentication during the payment process. Payment Initiation Services (PIS) also provide extra benefits for mitigating fraud risks.

By not offering payment by card, businesses can also reduce their exposure to card-not-present (CNP) fraud. UK Finance reports that CNP fraud cost UK businesses £199.4 million in the first half of 2022. This type of fraud was mostly carried out by criminals who obtained card details through data theft, such as third-party data breaches, phishing emails and scam text messages.

Open Banking and A2A Payments

Although there are several forms of A2A payments, open banking payments using PIS are a significant step forward as a secure payment mechanism and appeal to both consumers and businesses.

Our SafePay solution makes it easy for law firms to request and receive payments instantly from their clients using PIS. To find out more, get in touch today.