Speed and Better Branding Needed to Boost Pay-by-Bank Adoption

The popularity of account-to-account (A2A) transfers, which involve direct electronic fund transfers between two bank accounts, has surged over the past decade, largely driven by the growing adoption of open banking.

But despite its growing popularity worldwide, many A2A payment users, both businesses and consumers alike, have become increasingly dissatisfied with the constraints of these transactions.

Transaction limits and susceptibility to fraud have been major concerns, according to insights detailed in the latest installment of the “Real-Time Payments Tracker® Series Report” by PYMNTS Intelligence. According to the survey, not only do A2A payments lack certain fraud controls inherent in other payment methods like credit cards or other transfer methods, but they have no mechanisms to revoke or recover funds in the event of fraud.

Additionally, the monthly transaction limits set by financial institutions (FIs), typically at $5,000 per day and $30,000 per month, pose challenges for small businesses trying to pay vendors. These relatively low caps, combined with limited acceptance by businesses, force users to seek alternative payment solutions.

Americans have also expressed dissatisfaction with the slow and expensive nature of A2A transfers, and instead show a preference for faster payment methods such as peer-to-peer (P2P) apps.

As the report noted, 35% of consumers consider A2A payments too slow, and 36% are dissatisfied with the cost of these transfers. These numbers are even higher among millennial and Generation Z consumers, who prefer P2P apps like Venmo or PayPal. However, more than half of respondents indicated an interest in some form of A2A transfer, indicating a potential market if the speed and cost issues are addressed.

Real-Time and Good Branding

Real-time payments have become incredibly popular in recent years, and accelerating A2A payments into real-time transactions could boost their popularity and increase broader adoption in the U.S. market.

For instance, despite the fraud threat that traditional A2A payments present, more modern A2A methods like same-day ACH and real-time payments have lower fraud rates, affecting only 5% of organizations.

Against this backdrop, implementing real-time rails can enhance the safety and convenience of A2A payments for both consumers and businesses. Moreover, banks and FIs have a range of real-time options at their disposal, making it a practical choice for businesses seeking to reduce credit card fees. This shift to A2A payments may not only result in cost savings but also foster higher customer loyalty.

A2A payments could also use a brand lift, as Nuvei Vice President of Product Ed Dean pointed out in a June interview with PYMNTS.

As Dean explained, the multiple names and abbreviations — A2A, bank transfer and online bank transfer — used for the same payment method have created a branding problem. This lack of consistency leads to consumer confusion and concerns about security, despite A2A payments being highly secure.

“When we talk about account-to-account, it goes by many names,” 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.”

Besides standardizing the name, he said efforts should focus on educating consumers about the safety and benefits of A2A payments, making them more visible in eCommerce, and highlighting their cost-saving advantages for both consumers and merchants.

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