Account-to-Account (A2A) Payments | The 2024 Guide for Businesses

​​Account-to-account (A2A) payments transfer funds electronically from one bank account to another without intermediaries like card networks or third-party payment processors. 

Although A2A payments have existed for decades, they’re experiencing a global revolution. This is largely activated by open banking regulations which enable secure access to banking data for third-party providers via APIs. 

Globally, A2A transaction values are expected to grow at a 14% CAGR through 2027, gaining 1% global share.

A2A transfers are effective for virtually any money movement use case, including:

• From peer to peer* (splitting bills, personal loans, sending money)
• From consumer to business (automated bill payments, subscriptions)
• From business to business (supplier payments, invoice settlements, bulk orders)
• From business to consumer (payroll disbursements, expense reimbursements, refunds)
• From government to consumer (social welfare payments, tax refunds, pension disbursements) 
• From consumer to government (tax payments, license fees, fines)
• And more

‍*Note: Some peer to peer (P2P) transactions (like Venmo and Cash App) are not A2A payments since they are closed-loop systems that involve paying someone directly using their email or mobile number. Funds aren't moving directly from one bank account to another. Instead, P2P A2A payments move money directly from one bank account to another (like Zelle).

There are two types of A2A payments based on who initiates the transaction and in which direction funds are moving. 

Money is either pushed (sent directly) or pulled (withdrawn directly) from one bank account to another. Here’s what that means:

Push payments

A2A push payments are initiated by the payee to manually “push” funds from the payer’s bank account.

These direct debit payment initiations are typically used for one-time transfers like online orders or single bill payments. 

Pull payments 

A2A pull payments are initiated by the payer to authorize a payee to withdraw or “pull” funds directly from their bank account.

These are typically used for recurring payments like subscriptions or automated bill payments. 

The A2A payment process

There are three components to A2A payments: 

1. Authentication (for first-time transactions)

Before an A2A transaction is initiated between a customer and a new merchant, the customer’s account must be authenticated and “linked” to verify its ability to send funds. This onboarding process is easily completed using an aggregator with direct bank APIs, like Aerosync, which verifies an account by enabling the user to log in to their bank directly. 

Alternatively, micro-deposits (small transactions whose amounts customers must then verify) can be used before checkout. This is for accounts not connected to APIs or for users who choose not to use an instant method.

2. Authorization

To mitigate fraud, businesses offering A2A should perform fraud and risk detection checks. Additionally, leading A2A providers help reduce risk by identifying and blocking high-risk transactions. 

3. Money movement and settlement

Once the transaction is approved, funds are moved from the customer’s bank to the merchant’s account. Depending on the customer bank and the merchant’s payment processing partner, there are three different payment rails the funds can move along: 

1. ACH - The Automated Clearing House offers both ACH credit and ACH debit electronic transactions in a batch environment. Funds are typically processed within 1 to 3 days, depending on the processing window (First Same Day ACH, Second Same Day ACH, Third Same Day ACH, Next Day ACH). Read more on ACH payments.

2. RTP - RTP® from The Clearing House is a real-time payments platform that offers instant payments on its rails. Almost all U.S. financial institutions have access to RTP, and more are joining as volume grows. Right now, RTP is primarily used to send payments as real-time requests for payment aren’t widely available. 

3. FedNow - The Federal Reserve’s instant payment service was launched in 2023 to allow businesses and individuals to send and receive instant payments in real time, around the clock, every day of the year.

‍Aeropay specializes in A2A payments and works with over 12,000 financial institutions nationwide. We send funds along the fastest, most affordable route and instantly default to the next-best option depending on real-time availability.

Account-to-account payments have historically relied on bank connection methods like screen scraping, which pose security risks and operational challenges. Now, a growing concept called “open banking” makes the bank linking process seamless in places like the EU, and it’s set to do the same in the US. 

What is open banking? 

Open banking is a process of opening up data from banks and financial institutions to anyone who consents to securely access, use and share it. This data includes transaction and other financial information from checking, savings, and investment accounts. 

To connect these accounts, open banking uses application programming interfaces (APIs) to unlock data that’s historically been kept in-house. 

Third-parties are able to tap into these APIs to connect and access consumer data, enabling immediate bank connections and beneficial features like automatic payments and improved financial visibility. 

Open banking in Europe

In Europe, open banking began with the introduction of the Payment Services Directive (PSD1) in 2007. This laid the groundwork for a more integrated and efficient European payment market. 

But the real catalyst for open banking was the EU’s revised Payment Services Directive (PSD2), which came into force in January 2018.

These initiatives offer European consumers better control over their financial data, enhancing transparency and competition. Open banking also facilitates direct interactions between banks and third-party providers, leading to more personalized, competitive, and efficient financial services. 

At its core, open banking has driven new business models and revenue streams for financial institutions, reduced transaction costs, enhanced user experience, and sped up transactions, positioning Europe as a global leader in open banking.

Open banking in the United States

Open banking in the United States has been evolving more gradually compared to Europe, largely because the U.S. lacks a regulatory framework like Europe’s PSD2, which mandates data sharing.

But this is about to change. The Consumer Financial Protection Bureau (CFPB) is actively working to establish a foundation for open banking through their proposed Personal Financial Data Rights Rule. This new rule will implement section 1033 of the Consumer Financial Protection Act of 2010 (CFPA) and accelerate open banking in the U.S. by developing secure APIs for data sharing. 

Increased collaboration between traditional financial institutions and fintech companies will foster a new generation of financial services and payments in the U.S. — and it all starts with open banking.

A2A payments have already upended entire financial systems in many countries. The United States has been slow to follow suit, but that’s changing. 

The United States is set for a revolution alongside global payments and financial systems due to: 

Infrastructure readiness

The Automated Clearing House (ACH) network processed 8.2 billion payments worth $719 billion in the first quarter of 2024, up 27.2% from the previous year.

Real-time payment systems are expanding, with The Clearing House's RTP launched in 2017 and the Federal Reserve's FedNow in 2023, enabling 78% of U.S. bank accounts for real-time credit settlement.

FedNow and RTP are enhancing request for payment capabilities, expected to power instant settlement for A2A transactions soon.

Open banking acceleration

The open banking movement is accelerating in the U.S. 

According to Alex Johnson in a January essay for Fintech Takes, A2A payments may “end up being the most significant competitive threat enabled by open banking when all is said and done.” 

Frustration with existing card networks 

There’s growing merchant and consumer frustration with U.S. credit card dependency due to their high interchange fees and record-high interest rates. 

Ongoing litigation against card processors like Mastercard and Visa over excessive fees reached a climax with a recent $30 billion antitrust settlement proposal rejected. It’s clear Americans are at their breaking point with traditional card payments.  

Social proof: A2A in highly regulated industries

A2A-enabled ACH payments are the only compliant cashless payment option for cannabis retailers, given the federal legality issues surrounding traditional payment methods.

Emerging industries like online gaming also lean on A2A payments for instant withdrawals and compliance-first money movement.

As a result, millions in the U.S. are already using A2A payments for cannabis and online gaming, suggesting a readiness for broader adoption in other sectors like e-commerce, rent and utilities, and even retail at the point of sale.

Nations like Brazil, India, and the UK have already embraced A2A bank transfer payments. Now, the United States is ready to do the same. 

The value for merchants is clear. Now, the major hurdle to widespread adoption is getting consumers on board. This can be done by:

1. Incentivizing payments - 41% of consumers who have not used A2A transfers in the last 90 days are open to trying them if offered incentive programs. 

2. Adding real-time debits - FedNow and RTP are enhancing request for payment capabilities, expected to power instant settlement for A2A transactions soon.

3. Enabling faster, more secure onboarding - Next generation aggregators like Aerosync enable instant bank connections in under 15 seconds. 

As more consumers choose account-to-account payments, more merchants will discover the benefits this payments innovation offers. A cycle of adoption will accelerate until A2A becomes a direct competitor and disruptor of traditional card payments.

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Ready to join the future of payments? 

Aeropay helps U.S. merchants onboard and accept modern ACH payments with: 

• 12,000+ financial institution connections
• Millions of existing users
• Bank connections in under 15 seconds
• Solutions for every industry

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Contact our team to see how Aeropay helps you add A2A payments for any use case.

What are instant A2A payments?

Instant A2A payments are account-to-account transactions that occur in real-time, allowing funds to move from one bank account to another almost immediately. These transactions utilize real-time payment networks like RTP and FedNow, enabling fast and efficient transfers without delays.

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Are consumers willing to adopt A2A payments?

Yes, consumer interest in A2A payments is growing, especially when incentivized. According to studies, 41% of consumers who have not used A2A transfers in the last 90 days are open to trying them if offered incentive programs. The convenience, security, and cost benefits make A2A payments an attractive option.

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How do A2A payment systems work for online transactions?

For online payments, A2A payment systems authenticate and authorize the payer's bank account, ensuring funds are available. The payer then authorizes the payment and it’s sent to the merchant’s account. This seamless process provides a secure and efficient way to transfer funds directly between bank accounts.

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What are the benefits of A2A payments for businesses?

A2A bank payments offer businesses several benefits, including lower transaction fees compared to traditional card payments, enhanced security, reduced risk of fraud, and improved cash flow due to faster settlement times. They also provide more durable payment information, reducing the need for frequent updates.

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What industries benefit from account-to-account payments? 

Many US industries can take advantage of A2A payments. Examples include rent collection, online gaming, cannabis, wellness, payroll providers, and much more.

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How do A2A payment systems ensure transaction security?

A2A payment systems ensure transaction security through advanced measures such as multi-factor authentication, biometric authentication, encryption, and real-time fraud monitoring. These systems also use secure APIs for data sharing, reducing the risk of data breaches and unauthorized access common with methods like screen scraping.

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How do I add A2A payments at my business? 

Adding A2A payments at your business is easy with Aeropay, a trusted leader in A2A payments across the United States. We are building the next generation of A2A with features like:

• 12,000+ financial institution connections
• Trusted by millions of end users
• Bank connections in under 20 seconds
• Pay-by-bank solutions for every industry

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Ready to get started? Contact our team to see how Aeropay will help you streamline A2A payments.