Card Processing vs A2A Payments — it's getting hot in here 🔥

𝐂𝐚𝐫𝐝 𝐏𝐫𝐨𝐜𝐞𝐬𝐬𝐢𝐧𝐠 𝐯𝐬 𝐀𝐜𝐜𝐨𝐮𝐧𝐭 𝐭𝐨 𝐀𝐜𝐜𝐨𝐮𝐧𝐭 𝐏𝐚𝐲𝐦𝐞𝐧𝐭𝐬 👇

The payment landscape remains dynamic. Card transactions and Account to Account payments are undergoing significant changes in technology and business models whilst witnessing a rise in new market entrants.

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𝐂𝐚𝐫𝐝 𝐏𝐚𝐲𝐦𝐞𝐧𝐭𝐬 101:

Card payments involve several parties:

► Customer

► Merchant

► Acquirer

► Card networks ( Visa / Mastercard / GIE Cartes Bancaires )

► Issuing banks

When a customer makes a purchase, the merchant sends the transaction to the acquirer. The acquirer contacts the card network, which forwards the request to the customer’s issuing bank for authorization. After approval, funds are transferred from the issuing bank to the merchant’s account. The process, though secure, can take a few days due to multiple intermediaries and often incurs processing fees at each stage.

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𝐀𝐜𝐜𝐨𝐮𝐧𝐭 𝐭𝐨 𝐀𝐜𝐜𝐨𝐮𝐧𝐭 𝐏𝐚𝐲𝐦𝐞𝐧𝐭𝐬 101:

👉 A2A payments transfer money directly between the payer's bank and the recipient's bank, bypassing intermediaries like card networks. The process involves a customer initiating a payment that their bank processes, transferring funds to the recipient's bank. Clearing and settlement mechanisms (CSMs), such as Worldline or STET , ensure the transfer is executed securely and in real-time or near-real-time. Unlike card payments, A2A transactions are cheaper and faster since fewer parties are involved.

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𝐓𝐡𝐞 𝐄𝐯𝐨𝐥𝐮𝐭𝐢𝐨𝐧 𝐨𝐟 𝐂𝐚𝐫𝐝 𝐚𝐧𝐝 𝐀2𝐀 𝐏𝐚𝐲𝐦𝐞𝐧𝐭 𝐏𝐫𝐨𝐜𝐞𝐬𝐬𝐢𝐧𝐠:

👉 Card-based payments have been the backbone of global commerce for decades. Card payments have evolved to include innovations like contactless payments, mobile wallets, and tokenization. At the same time, A2A payments have emerged as a viable alternative, driven by the rise of Open Banking and real-time payment infrastructures. Next-generation processors, like Stripe and Marqeta , Checkout.com , are reshaping card payments with digital-first, API-based platforms, while A2A leaders like Form3 and Modulr are pioneering direct bank transfers.

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𝐓𝐡𝐞 𝐈𝐦𝐩𝐚𝐜𝐭 𝐨𝐟 𝐎𝐩𝐞𝐧 𝐁𝐚𝐧𝐤𝐢𝐧𝐠 𝐨𝐧 𝐀2𝐀 𝐏𝐚𝐲𝐦𝐞𝐧𝐭𝐬:

👉 Open Banking allows third-party providers (TPPs) to access bank accounts securely through APIs, enabling A2A payments without needing card networks. By facilitating the seamless exchange of financial data between banks and TPPs, Open Banking is allowing A2A payments to thrive.

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The payments ecosystem continues to be dominated by card payments but A2A payments are rapidly gaining ground. The rise of Open Banking has propelled A2A as a viable alternative, cutting out intermediaries and speeding up payment processes. The leaders in card-based payments have and are investing in Account to Account payments. The race continues

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Source: Skaleet

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► Connecting the dots in payments... & Marcel van Oost