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HOW IS OPEN BANKING DISRUPTING THE OUTLOOK FOR PAYMENT CARDS ?
By Todd Clyde , CEO of Token . io
Open banking-enabled account-to-account ( A2A ) payments might not kill cards entirely – but the threat they pose is indisputable . A2A payments has emerged as a powerful contender and is claiming volume from cards . In Europe , credit and debit cards ’ combined share of ecommerce transaction value is forecast to decline from 40 % in 2022 to 35 % in 2026 , as analysts predict a bold future for A2A payments ( often called ‘ pay-by-bank ’).
A2A payments move money over national clearing systems . 74 countries already have , or are , in the process of upgrading these systems to instant or realtime . This trend , combined with the easier access to these systems that open banking enables , is a catalyst for the emergence of a next-generation and lower-cost network for processing payments .
For some time , merchants have been sounding the alarm over rising card fees . Pay-by-bank presents an attractive , lowercost alternative . A2A payments also outperform cards when it comes to UX . Consumers approve payments directly in their banking app , benefiting from bankgrade security with a smoother payments experience .
Merchants also benefit from instant settlement and an unparalleled ability to maximise acceptance . A2A payments can be used by anyone with a bank account , and now also deliver better success rates than cards in many markets .
86 August 2023