Account-to-account (A2A) payments powered by instant payment infrastructures and open banking APIs are set to gain strength globally. As these systems rise, many are asking:
what becomes of traditional card schemes if/when A2A becomes the default method of digital payment?
Card schemes hinge on global network reach, consumer protections, and interchange fee-based revenues. A2A payments, however, cut through that by enabling direct, low-cost transfers between bank accounts, sometimes faster and cheaper than card rails. That
poses a fundamental threat to the card schemes’ core model, particularly as A2A gains adoption among merchants, regulators, and consumers seeking efficiency and affordability.
The catalyst for A2A payments was the implementation of EU’s Payment Services Directive 2 (PSD2) that required banks to grant third-party providers access to customer account
information via APIs. It also mandated strong customer authentication (SCA) for online payments to reduce fraud. This opened the door for A2A-based services and fintech innovations,
with the ambition to reshape the payments landscape.
While PSD2 may ot have resulted in a seismic shift in the payments landscape as many predicted, feared and hoped for, the impact was still widely felt. Although there was some level of friction, the XS2A rule
opened the door to third-party fintech companies to enter the payment ecosystem through A2A payments.
In short, PSD2 set the stage for A2A’, challenging the position of traditional card schemes in retail payments. In the longer term, this shift may impact the role of traditional card schemes in numerous ways.
The growth of A2A systems challenges the revenue base of card networks. An analysis by McKinsey shows that A2A alternatives
pose a significant threat to card issuing and acquiring, not just on pricing, but also on speed, especially when paired with SEPA Instant Credit Transfers.
While account-to-account (A2A) and instant payments are growing rapidly across Europe, adoption varies strongly between markets. According to ACI’s Prime
Time for Real-Time 2023 report, Europe processed about 13.2 billion instant-payment transactions in 2022, a figure expected to more than double to 34.2 billion by 2027, representing an annual growth rate of roughly 21 percent. Even so, instant payments
accounted for only about 7 percent of all electronic payments in Europe that same year.
A similar study by SBS Software shows that roughly 19 percent of all credit transfers in the EU are now processed through instant-payment rails,
with around 70 percent of payment service providers (PSPs) participating in instant-payment schemes.
Consumer behavior is shifting alongside infrastructure improvements. A recent Token and Open Banking Expo survey found that 46
percent of European consumers had made an instant bank transfer within the past three months, and 81 percent said they were likely to use A2A payments in the future. This indicates growing trust and awareness of the benefits, most notably speed and lower costs
compared to traditional card transactions.
Some European countries are leading the charge with strong domestic solutions. Poland’s BLIK now processes hundreds of millions of transactions annually, while the Netherlands’ iDEAL has long dominated domestic e-commerce payments. For P2P, solutions like
Vipps Mobilepay in the Nordics and Spain’s Bizum have become the standard for such payments
Meanwhile, countries like Germany and France are catching up quickly. Germany’s instant payments represented just 2.5 percent of all payments in 2022 but are forecast to grow to 2.7 billion transactions by 2027, according to ACI
and SBS data. France recorded around 202 million instant transactions in 2022, a number expected to surge to 1.4 billion by 2027, reflecting
an impressive 48 percent annual growth rate.
In short, instant and A2A payments still represent a minority of total transactions in Europe today, but their momentum is unmistakable. Regulatory mandates for SEPA Instant reachability and broader open-banking integration are accelerating adoption, positioning
A2A payments to become a cornerstone of Europe’s digital-payment infrastructure over the next few years.
Looking beyond EU, A2A is gaining momentum globally without the need for a regulatory push such as PSD2.
In Brazil, instant payment system Pix is projected to surpass credit cards in e-commerce by the end of 2025 with 44% versus 41% of transaction share. The PYMNTS Intelligence report “Digital
Developments: Charting Digital Payment Growth in Latin America” finds that the region’s adoption of mobile wallets, account-to-account transfers and real-time payments is accelerating financial inclusion as much as it is changing consumer habits. Cash’s
dominance has eroded over the last decade. By 2030, researchers project two-thirds of all eCommerce spending in Latin America will move through digital rails.
As A2A becomes a utility-like infrastructure, traditional card scheme providers could pivot to several different roles to ensure continued relevance.
Take on the role as a utility provider, thus focusing on cost leadership and expanding offerings with RTGS and similar services as invisible settlement engines with limited visibility and no consumer presence.
Embrace an orchestrator position and manage routing through several underlying payment rails, enabling contextual switching between A2A, traditional schemes, closed-loop wallets, digital currencies, and more.
Diversify and expand offerings. To value-added services such as identity, loyalty, tokenization, dispute services and more.
The roles may not be mutually exclusive; there will likely be various permutations where a portfolio of offerings are combined in different ways.
PSD2 significantly accelerated A2A payment adoption by empowering open banking and introducing robust authentication. As A2A becomes mainstream, card schemes face pressure to adapt or risk obsolescence by repositioning as utility providers, multi-rail orchestrators,
or diversified services platforms.
The forthcoming PSD3 and PSR regulatory framework further shapes the landscape by demanding greater transparency, stronger security, and equitable standards across all providers. These changes could either reinforce the growth of A2A systems or create stronger
guardrails, thus benefiting schemes that successfully evolve and comply, act as orchestrators, or diversified services platforms.
The forthcoming PSD3 and PSR regulatory framework further shapes the landscape by demanding greater transparency, stronger security, and equitable standards across all providers. These changes could either reinforce the growth of A2A systems or create stronger
guardrails, thus benefiting schemes that successfully evolve and comply.
