The convergence of account-to-account payments and card rails

There is pressure across the globe for the modernisation of consumer payments to make them more convenient and cost-effective. This can be evidenced by the initiation of real-time payment rail systems by over 70 national governments, including China, UK, Nigeria and Thailand to name a few.

Since the launch of RTP systems, new, faster payment methods have become available, such as Account-to-Account (A2A) payments. In essence, A2A payments allow real-time electronic funds transfers directly between bank accounts through regulated payment platforms. Some countries, such as Saudi Arabia and Ghana, have even chosen to implement A2A with QR codes.

Challenges of A2A and convergence of rails

Banking organisations could come under risk from the advent of A2A payments. There is a chance they could be displaced by new entrants due to loss of visibility over a large part of their customers’ payments. There is also a risk to the profitability of banks as they struggle to monetise the service, not to mention the operational risks involved with challenges related to chargebacks.

Some also consider A2A a threat to the traditional card rails, yet there is increasing evidence of a convergence of the two rails. This seems likely since cards still provide important value-adds like rewards, security protections and chargeback processes.

Card networks recognise the potential disruption of real-time A2A payments and have responded by acquiring assets and developing offerings in this space themselves. For example, the acquisition of Vocalink and Nets by Mastercard, and the launch of account-based payment capabilities through Pay By Bank Transfer by American Express. There is also interest in the B2B space: Visa B2B Connect, an account-to-account, DLT-based, cross-border payments network, has enrolled more than 30 banks and is facilitating payment flows across 90 countries.

To meet the demands of flexible, real-time payments infrastructure, cards are likely to continue to evolve their business models to remain competitive, pointing to a convergence between the two payment models.

HPS powering A2A payments

HPS, being extremely active in the A2A space, is well-placed to achieve full convergence of card and account-to-account rails. In addition, HPS powers well-known A2A payment systems, such as the national switch of Morocco, as well as acting as an interbank switch for other regions around the world.

Furthermore, HPS’ PowerCARD supports several use cases for account-to-account payments. Firstly, PowerCARD allows HPS clients to launch new payment types. Our clients use PowerCARD to issue their own alternative digital payment wallets for P2P, P2M and other use cases. Based on QR code and account-to-account transfers, the PowerCARD wallet management solution allows our clients to deploy their own interoperable wallet solutions to their customers and merchants.

Secondly, PowerCARD implements the convergence of both card and account-to-account payment rails in one unique solution, giving HPS clients full 360° view on their merchants’/customers’ payments, re-using the same risk/fraud/authentication/reporting mechanisms for a seamless payment experience across several forms of payments.

Ultimately, in support of the convergence of A2A and card rails, HPS has the ability to enable innovative payments through its open platform, allowing the processing of any transaction coming from any channel initiated by any means of payment.

To discover more about HPS and PowerCARD capabilities, please contact