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The Role of Regulation in the Evolution of A2A Payments

Boaz Gam

Boaz Gam


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4 min
Article content
  1. Global Demand for A2A Payment Schemes
  2. Why Is Regulation Crucial for A2A Payments?
  3. Current State of the A2A Regulation
  4. The Future of A2A Schemes’ Regulatory Frameworks

How Do Regulations Influence the Evolution of A2A Transfers?

The advancement of open banking and Application Programming Interfaces (APIs) has catalyzed the appearance of multiple new access and connectivity opportunities. This innovation course, in turn, has played a critical role in strengthening the links between FinTechs, banks, and payment platforms and streamlined the rise of account-to-account (A2A) payments.

Of course, the rapid development of this payment technology wouldn’t be possible without a strong regulatory framework to back it up. Read on to get to know which rules and guidelines currently govern A2A payments and find out how they are expected to influence their evolution in the upcoming years.

Global Demand for A2A Payment Schemes

How Do Regulations Influence the Evolution of A2A Transfers?

A2A payments have been around for quite a while in some countries, such as Sweden (Swish) and the Netherlands (iDEAL). Besides, the SEPA Credit Transfer (SCT) scheme facilitates account-to-account money transfers across the SEPA area. With that said, real-time payment systems are still new to North America and parts of Europe and have a lot of potential yet to be tapped into.

The versatility, cost-effectiveness, and speed of A2A systems continue to drive interest toward this payment solution worldwide and give industry experts the grounds to claim that it will be able to replace credit cards in the foreseeable future.

Why Is Regulation Crucial for A2A Payments?

How Do Regulations Influence the Evolution of A2A Transfers?

Aside from the growing demand for A2A payment schemes, there are also some prerequisites that need to be in place to ensure their global expansion. One of these decisive factors is the ability of regulation to keep up with the pace of innovation and create the right environment for competition to flourish.

Without A2A payment schemes being regulated, non-issuing banks would not have the capability to offer the set of services and guarantees fit to compete with credit cards.

This is due to the fact that issuers offer services that differentiate credit card payments from A2A transactions and are not accessible to other banks, such as:

  • Revolving credit
  • Transaction disputes
  • Fraud insurance

Yet, these services typically come at a high price for both merchants and consumers.

In a market with healthy competition, users will be able to access A2A and card-based payments for the same price, which would lead to:

  • Eliminated friction
  • Lower interchange fees
  • Simpler integration of innovative technologies

As you can see, using A2A rails to provide the infrastructure would help to significantly improve global payment processes. But how close are we to this order of things?

Current State of the A2A Regulation

How Do Regulations Influence the Evolution of A2A Transfers?

One excellent example of the way regulation can support the expansion of A2A payment schemes is Europe’s Strong Customer Authentication (SCA). This extra security layer was introduced to boost the security of online and contactless transactions by requiring additional authentication steps during checkout.

However, apart from achieving its initial goals, SCA has also inadvertently allowed A2A transactions to compete with card-based ones by enabling advanced security for payments while keeping them frictionless.

What’s more, there is plenty of deliberate action across the globe promoting the growth of A2A payments.

United Kingdom

The UK currently has two active A2A-related initiatives:

  • The establishment of a regulatory body for governing open banking and A2A payment processes under the supervision of the UK's Treasury, Financial Conduct Authority (FCA), and Payment Systems Regulatory (PSR).
  • The proposal of new regulations into parliament by the PSR and FCA aimed at minimizing fraud.

European Union

The EU is promising to take regulatory action in the upcoming months to improve the current state of real-time payments. In addition, the European Central Bank has prompted the EU Payments Council to speed up the updating of existing instant payments with the help of the SEPA Instant Credit Transfer Scheme.


In the United States, the Federal Reserve is launching its own RTP scheme, FedNow. The system is expected to go live already in 2023.

In preparation for this event, the organization finalized the rules that will govern fund transfers over the FedNow network in May 2022.

The Future of A2A Schemes’ Regulatory Frameworks

How Do Regulations Influence the Evolution of A2A Transfers?

While the A2A payments concept is relatively new, it is clear to see that countries across the globe recognize its potential and take regulatory action to promote its adoption. However, we are yet to witness whether these initiatives will prove to be fruitful.

What can be said with certainty, however, is that the past years have created a strong basis for the long-term development of account-to-account transfers. As a result, despite the unwillingness of many issuers to encourage the spread of this payment method, the demand for A2A transactions continues to grow.

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