Account-to-Account Payments: The Open Banking Alternative to Cards

Every time a consumer taps a credit card, the merchant pays a toll: interchange to the issuing bank, scheme fees to Visa or Mastercard, and a margin to the acquirer. Together, these costs typically run 2% to 3.5% of the transaction value in the United States, and even with EU interchange caps they still add up. Account-to-account (A2A) payments offer a fundamentally different path: money moves directly from the payer's bank account to the payee's, bypassing card networks entirely.

The mechanism is not new. Wire transfers and direct debits have moved money between accounts for decades. What changed is the regulatory and technical layer on top: open banking APIs that let third-party providers initiate payments from a customer's bank account with their explicit consent, in real time, at a fraction of card costs.

How A2A Payments Work

In a card transaction, money flows through a multi-party relay: the merchant's payment processor contacts the card network, which contacts the issuing bank, which authorizes the transaction. Settlement arrives days later through a clearing process involving multiple intermediaries, each taking a cut.

A2A payments collapse this chain. The payer authenticates directly with their bank (typically through their banking app), and money moves over existing payment rails like Faster Payments, SEPA Instant, or FedNow. The payment is a push payment: initiated by the payer, not pulled by the merchant. This distinction matters for fraud, fees, and finality.

The Open Banking Layer

Open banking regulation requires banks to expose standardized APIs that licensed third parties can use to read account data or initiate payments. In Europe, the legal foundation is PSD2 (the Revised Payment Services Directive), which came into force on January 13, 2018. It created a new category of regulated entity: the Payment Initiation Service Provider (PISP), licensed to trigger bank transfers on a customer's behalf.

The typical checkout flow works like this: a customer selects "Pay by Bank" at checkout, chooses their bank from a list, gets redirected to their banking app for authentication (usually biometric or PIN), approves the payment, and returns to the merchant site. The entire process takes seconds. Behind the scenes, the PISP uses the bank's API to submit a payment initiation request, and the bank executes it over its domestic real-time payment rails.

Push vs. pull: Card payments and direct debits are pull payments: the merchant (or their processor) draws money from the customer. A2A open banking payments are push payments: the customer instructs their own bank to send money. This inversion means merchants never see or store bank credentials, and fraud dynamics shift significantly.

The Economics: Why Merchants Care

The cost difference between cards and A2A is the primary driver of merchant interest. The gap is especially stark in the United States, where interchange fees are unregulated and average credit card processing fees reached 2.35% in 2025.

In the European Union, the Interchange Fee Regulation caps consumer debit card interchange at 0.2% and credit card interchange at 0.3%. This narrows the gap, but total merchant costs for card payments still run higher once scheme fees and acquirer margins are added. For a deeper breakdown of card economics, see our analysis of card network economics.

The savings compound at scale. A merchant processing $10 million annually saves $150,000 to $250,000 by shifting from cards to A2A at a 1.5% to 2.5% fee reduction. For high-volume, low-margin businesses like grocery, fuel, or utilities, these numbers can mean the difference between profit and loss.

The Major Players

A wave of fintech companies has built the infrastructure layer that connects merchants to bank APIs. These platforms abstract the complexity of integrating with hundreds of banks across multiple markets, each with slightly different API implementations.

Consolidation is accelerating. Visa acquired Swedish open banking platform Tink for $2 billion in 2022. Trustly acquired UK-based Ecospend in early 2023. National Australia Bank acquired Banked. The card networks themselves are positioning for a world where A2A captures meaningful volume: better to own the infrastructure than be disintermediated by it.

Variable Recurring Payments: The Subscription Play

One-off A2A payments solve the checkout cost problem, but subscriptions and recurring billing have traditionally required cards or direct debits. Variable Recurring Payments (VRPs) fill this gap. VRPs let a customer authorize a third-party provider to initiate a series of payments from their bank account at variable amounts and intervals, with only one Strong Customer Authentication (SCA) step at setup.

The customer sets parameters: maximum amount per payment, maximum cumulative amount per period, and an expiry date. Within those boundaries, payments flow automatically over A2A rails without requiring re-authentication for each transaction. This makes VRPs suitable for utility bills (which vary month to month), metered SaaS pricing, or investment top-ups.

Sweeping vs. Commercial VRPs

The UK distinguishes two types. Sweeping VRPs move money between accounts owned by the same person: for example, automatically transferring excess funds from a current account to a savings account. The UK's Competition and Markets Authority mandated the nine largest banks (the CMA9) to support sweeping VRPs, which went live in mid-2022.

Commercial VRPs (cVRPs) are the higher-stakes category: payments from a customer to a business, positioned as a replacement for card-on-file subscriptions and direct debit. A new industry body, UKPI (UK Payments Initiative), was formed by 31 firms to enable commercial VRPs, with first live cVRP payments arriving in early 2026. Phase 1 use cases include utility payments, financial services, and government payments.

By mid-2025, VRPs accounted for 13% to 16% of all UK open banking payments, reaching 4.26 million transactions in July 2025 alone. Industry estimates suggest at least 75% current account coverage is needed for cVRPs to reach meaningful scale as a direct debit alternative.

VRPs vs. direct debit: Direct debits settle in 3+ days, offer no real-time visibility, and can be reversed weeks later via the Direct Debit Guarantee. VRPs settle near-instantly, give customers granular control over limits, and use Strong Customer Authentication at setup. The tradeoff: VRPs currently lack the universal bank coverage that direct debit enjoys.

Why Adoption Varies by Region

A2A payment adoption is wildly uneven across geographies. Some markets have made bank-to-bank payments the default; others remain firmly card-dominant. The difference comes down to regulation, infrastructure, and consumer habit.

Where A2A Dominates

The Netherlands leads in Europe: iDEAL, the Dutch A2A payment method, holds roughly 73% market share for online purchases and processes over 1.3 billion transactions annually. Poland's BLIK processed 2.4 billion transactions in 2024 (up 37% year-over-year), with 18.5 million active users. In 2024, BLIK became the most popular e-shopping payment method in Poland at 68%, surpassing both quick transfers and credit cards. Sweden's Swish reaches 86% of the population and exceeded 100 million transactions in a single month for the first time in May 2025.

Outside Europe, the scale is even larger. India's UPI processed over 228 billion transactions in 2025 worth nearly $3.6 trillion, holding an 84.8% share of retail digital payment volume. Brazil's PIX, launched by the Central Bank in November 2020, processed an estimated 64 to 68 billion transactions in 2024, reaching 93% of the adult population. For a broader comparison, see our analysis of the global real-time payments landscape.

Where Cards Still Win

The United States averages only 18 real-time payment transactions per capita, compared to a global average of 59. Several factors explain the gap:

• No sweeping open banking mandate comparable to PSD2. The CFPB's Rule 1033 was finalized in October 2024 but has been stayed and is under reconsideration as of 2025.
• Strong consumer preference for credit card rewards, purchase protection, and interest-free float.
• FedNow launched in July 2023 but bank adoption has been slow: institutions lack clear business incentives to cannibalize profitable card revenue.
• Buy Now, Pay Later has captured much of the alternative payments demand that A2A might otherwise serve.

The Regulation Pipeline: PSD3 and Beyond

Europe is not standing still. On November 27, 2025, the European Parliament and Council reached provisional political agreement on PSD3 and the Payment Services Regulation (PSR). Publication in the Official Journal is expected by late Q2 2026, with applicability targeted for Q2/Q3 2028.

The key shift: PSR moves conduct rules from a directive (which requires national transposition) to a directly applicable regulation, creating a single rulebook across the EU. This should reduce the fragmentation that has plagued open banking adoption, where each member state's implementation of PSD2 differed slightly.

In the UK, the payment infrastructure itself is being modernized. The New Payments Architecture program (now renamed the Interbank Infrastructure Renewal) will replace legacy Faster Payments and BACS systems with ISO 20022-based messaging, enabling richer data, automated reconciliation, and better support for overlay services like VRPs and Request to Pay.

A2A Limitations: What the Pitch Decks Don't Say

A2A payments solve the cost problem, but they introduce tradeoffs that merchants and consumers need to understand.

No Chargeback Protection

Card networks provide consumer protection through chargebacks: if a product is defective or never delivered, the consumer can dispute the charge and the issuing bank reverses it. A2A push payments have no equivalent mechanism. Once money is sent, recovering it requires direct negotiation with the recipient or legal action. This is a significant barrier for consumer e-commerce, where chargeback rights are considered a baseline expectation.

Bank UX Fragmentation

Card payments offer a universal experience: enter a 16-digit number, expiry, and CVV. A2A payments require bank selection and authentication through the bank's own interface, which varies wildly across institutions. Some banks support smooth app-to-app redirects; others fall back to clunky mobile web flows. This inconsistency hurts checkout conversion rates, especially for first-time users unfamiliar with the flow.

Coverage Gaps

Not all banks support payment initiation APIs equally. In mandated markets like the UK, the CMA9 banks must comply, but smaller banks and building societies may offer limited or unreliable API support. In markets without mandates, coverage can be patchy. A payment gateway that offers A2A must still fall back to cards for customers whose banks are not connected.

No Card-on-File Equivalent

Stored card credentials enable one-click purchasing. A2A has no equivalent for one-off payments: each transaction requires the customer to authenticate with their bank. VRPs address this for recurring scenarios, but for spontaneous purchases, the friction remains higher than cards. This is why A2A has gained traction fastest in contexts where the payment amount is large enough to justify the extra step (utilities, rent, B2B invoices) rather than low-value impulse purchases.

Market Trajectory

Despite these limitations, A2A volumes are growing rapidly. According to Juniper Research, global A2A transaction value reached $91.5 trillion in 2025 and is projected to hit $195 trillion by 2030. Consumer A2A payments specifically are expected to grow from $1.7 trillion to $5.7 trillion in the same period.

In the UK, open banking surpassed 16.5 million user connections by December 2025 (up 36% year-over-year), with open banking payments growing 53% and reaching 7.9% of all Faster Payments volume. The trajectory suggests A2A will not replace cards entirely but will capture specific segments where cost savings outweigh the UX tradeoffs: high-value purchases, recurring payments, B2B invoicing, and payroll. For more on how merchant payment acceptance costs break down, see our dedicated analysis.

A2A and Stablecoins: Parallel Disruptions

A2A payments and stablecoin payment rails share the same core thesis: bypass card networks to reduce payment costs. Both route around Visa and Mastercard. Both promise faster settlement. But they approach the problem from different angles, and each has blind spots the other covers.

A2A payments work within the existing banking system. They rely on bank APIs, bank authentication, and bank-operated clearing rails. This gives them regulatory clarity and consumer familiarity, but also means they inherit the banking system's limitations: operating hours in some markets, geographic fragmentation, and the requirement that both payer and payee have bank accounts.

Stablecoins operate on blockchain rails that are inherently global and always on. A stablecoin transfer on Spark settles instantly regardless of the sender's and receiver's countries, time zones, or banking relationships. USDB on Spark enables dollar-denominated payments with Bitcoin-grade finality and no bank dependency.

The practical question for merchants and fintechs is not A2A or stablecoins, but which tool fits which corridor. A2A excels in domestic markets with strong open banking infrastructure: a UK merchant collecting subscription payments is well served by VRPs. But for cross-border B2B payments between a European buyer and a Southeast Asian supplier, stablecoin rails avoid the correspondent banking chain entirely.

Where each approach wins: A2A is strongest for domestic payments in regulated, bank-dense markets. Stablecoins are strongest for cross-border transfers, underbanked populations, and always-on settlement. The overlap is growing: both are targeting merchant checkout, recurring billing, and payroll disbursement.

What Comes Next

The A2A market is maturing along several axes. PSD3/PSR will harmonize open banking rules across the EU by 2028, reducing fragmentation. Commercial VRPs are scaling in the UK, with broader European adoption likely to follow. Infrastructure consolidation (Visa acquiring Tink, NAB acquiring Banked) is bringing A2A capabilities into incumbent payment stacks through payment orchestration platforms.

Meanwhile, stablecoin rails are evolving in parallel. Frameworks like the EU's MiCA regulation and the proposed US GENIUS Act are providing the regulatory clarity that institutional adoption requires. On Spark, stablecoins like USDB already support instant, self-custodial dollar payments with near-zero fees. Wallets like General Bread make this accessible to everyday users: dollar balances backed by Bitcoin infrastructure, without the complexity of managing keys or channels.

For developers building payment products, the strategic question is clear. A2A via open banking is the right choice for domestic, bank-to-bank flows in well-regulated markets. Stablecoin rails handle the cases A2A cannot: cross-border, 24/7, and bankless. The Spark SDK lets developers integrate both Bitcoin and stablecoin payments into applications with self-custody guarantees. The future of payments is not one rail replacing another: it is embedded finance stacks that route each payment over whichever rail offers the best combination of cost, speed, and coverage for that specific transaction.

This article is for educational purposes only. It does not constitute financial or investment advice. Bitcoin and Layer 2 protocols involve technical and financial risk. Always do your own research and understand the tradeoffs before using any protocol.