Account-to-Account Payments Have a Branding Problem

Business has a way of creating an alphabet soup of abbreviations and marketing names for financial products, and that’s certainly the case with account-to-account, or A2A, transfers.

It’s helpful to simplify, especially when new uses are found for legacy payment methods that are in wide use — but under other names — which can cause security anxiety around “new” payment methods that aren’t new, but rather preexisting technology repurposed for new uses.

“When we talk about account-to-account, it goes by many names,” Nuvei Vice President of Product Ed Dean told PYMNTS. “Account to account, bank transfer, online bank transfer. I think the trend we’re seeing right now is the emergence of our online bank transfer concept, if you will. From a payment perspective, let’s just start by saying it’s all ACH.”

The fact that A2A payments, perhaps more familiar to consumers by the moniker bank transfers, use ACH rails established over 50 years ago and are considered as secure as it gets when sending and receiving money, should put a lot of minds at ease. But it begs for explaining.

According to the study “New Payment Options: Building Stronger Customer Ties With Pay By Bank Transfer,” a PYMNTS and Nuvei collaboration, those who use this payment method, also called pay by bank transfer, are far more likely to want to use it again, with 44% of consumers who previously paid using an online bank transfer interested in doing so again.

But there is a lack of familiarity that’s holding back wider use of A2A transfers, and that has to do with the newer use cases being created around an old payment system.

It’s not that the underlying rails have changed.

“What has changed is the bank’s introduction of [application programming interface (API)], allowing a consumer, when making a purchase, to click a button that will allow them to log onto their bank and have their bank provide the account and routing number to the processor — not to the merchant, but to the processor, keeping that sensitive data away from the merchant,” Dean said. “This allows the merchant to process the sale.”

And while a lot of people couldn’t remember their bank account number if quizzed, much less the bank’s routing number, many consumers today are frequent users of online banking, so getting the word out is half the battle with broader A2A adoption as a payment method.

Markers on the Path to Scale

The previously cited study found that when it comes to consumer preference for different payment methods, with online bank transfers — or A2A payments, again, the same thing — only 22% selected bank transfers for being secure. That’s ironic, given how safe they are.

Asked about that low confidence for a time-tested form of payment like ACH, Dean said: “It sort of suggests that we have our work cut out for us as an industry on education.

“In sales, there’s this concept of ‘land and expand.’ Online bank transfers have landed. Now it’s time to expand the education around this payment method, specifically on how secure it is, specifically to the consumer community.”

He called the 22% finding “more of a marker at this point in our journey that we still have work to do on the education side for the consumer.”

Harking back to a lack of familiarity with bank transfers as a payment method, especially in eCommerce, few consumers have encountered A2A as an option at checkout, and while that’s changing now, it’s got to build up a head of steam, much as buy now, pay later did at the start.

Dean said the U.S. consumer is comfortable with ACH and eCommerce, “yet ACH has not really been a part of the eCommerce experience. There are a few situations that it has. We’ve seen it in wallets, where it is a sort of third-party button. But what we’re seeing is the emergence of putting the power of choice for a consumer on the actual checkout page with a bank transfer.”

Like other solutions in the world of digital commerce, it often takes just one positive experience with A2A payments for consumers to like it and use it again. Also, there are strong protections in place to keep the method secure at a time of increasingly sophisticated cybertheft.

“Once successful in their first transaction, return visits become somewhat frictionless,” he said. “What I mean by that is the consumer doesn’t have to log into their bank again. We, the processor, already have the account and routing with a token. We can quickly ping their bank for a balance update to approve a returning transaction.”

When it comes to recurring payments, bank transfers are more popular as a bill-pay method, but consumers still need reassurance that they can shut it off as easily as they can a card.

Merchants Also Benefit

It also behooves merchants to embrace A2A payments, as they avoid credit card interchange fees that have become a major cost center for retailers. There are fewer declines as well because the funding source being authenticated is the consumer’s bank account.

Bring A2A bank transfers into the eCommerce environment, and merchants discover several benefits to this payment method, convincing more sites to add it at checkout.

Dean agreed that bank transfers allow eTailers to accept ACH easily and with other advantages.

“It expands their reach a little bit,” he said, adding that three primary reasons retailers like A2A are to reduce fees associated with card payments, easily resolve incorrectly entered information and facilitate easier returns.

“When I’ve been provided [bank] information, I, the merchant, know whom I’m doing business with,” Dean said. “It’s not somebody who’s just randomly typing in an account and a routing number. It’s a one-to-one sort of relationship.”

For these reasons, consumer awareness is increasing, merchants offering the A2A payment option are rising, and, as Dean added, “ACH is how money moves in the U.S. We’re going to be seeing that whether it’s a bank-to-bank transfer or an online bank transfer, and obviously you want to have a trusted partner in that process. That’s your financial institution.”