Account-to-account payments are the fastest-growing segment in UK payments. But faster growth does not automatically mean the right fit for every merchant.
Here is a number that should make any UK merchant stop and think: account-to-account payments are projected to grow at 13% annually through 2027, making them the fastest-growing payment segment in the world right now. That figure comes from McKinsey's Global Payments Report 2023, and it is not driven by consumer novelty or a fintech marketing campaign. It is driven by infrastructure that has quietly matured over the last five years, largely beneath the notice of the average high street business owner.
So the question is not whether A2A payments are growing. They clearly are. The question is whether that growth means anything practical for your business today, and whether accepting bank-to-bank transfers is a decision worth making in 2024 and beyond.
Let us work through it properly.
Account-to-account payments, often called A2A, move money directly from a customer's bank account to a merchant's bank account. No card network in the middle. No Visa or Mastercard taking a slice. No card-issuing bank collecting an interchange fee.
In the UK, this infrastructure runs on Faster Payments, the system that processes over 3.8 billion transactions per year according to UK Finance's Payment Markets Summary 2023. When you transfer money via your banking app, you are using Faster Payments. When a customer pays a merchant through an open banking-enabled checkout, that is A2A built on the same rails.
What A2A is not: it is not a cryptocurrency payment. It is not a wallet-to-wallet transfer in the PayPal sense. It is not a BACS payment (which takes three days). It is a direct, real-time bank transfer initiated through a regulated payment initiation service.
The enabling technology here is open banking, which the UK introduced in 2018 following the Competition and Markets Authority's retail banking investigation. Today the UK has over 11 million active open banking users, according to Open Banking Limited's Impact Report 2023. That is not a niche. That is a meaningful and growing portion of the UK adult population.
Let us be honest about why merchants should care. It comes down to fees.
A standard card transaction in the UK costs a merchant somewhere between 0.3% and 1.8% depending on the card type, the acquirer, the pricing model, and whether the customer is using a basic debit card or a premium rewards credit card. For a business processing £500,000 per year in card payments, even a blended rate of 0.8% represents £4,000 in processing fees annually. At 1.5%, that is £7,500 gone before you have paid for a single hour of staff time.
A2A transaction fees are typically flat and low. Most open banking payment initiation providers charge between 10p and 20p per transaction, regardless of transaction value. For a £500 sale, the difference between a 1.2% card fee (£6.00) and a 15p A2A fee is £5.85. On a single transaction. Multiply that across thousands of transactions and the maths becomes genuinely compelling.
This is especially relevant for high-value merchants: camera retailers, furniture businesses, bespoke tailors, professional service firms, anyone processing transactions above £200 regularly. The higher the average transaction value, the more painful percentage-based card fees become.
The 13% annual growth figure is not a projection pulled from optimism. It reflects several structural forces converging simultaneously.
First, the PSR's Variable Recurring Payments programme is expanding the practical use cases for A2A beyond one-off payments. VRPs allow customers to authorise a merchant to pull variable amounts from their account within agreed limits, making A2A viable for subscriptions, utilities, and instalment payments. The PSR published its VRP roadmap in 2023, with commercial VRPs between non-sweeping accounts targeted for broader rollout through 2024 and 2025.
Second, Faster Payments transaction values are rising. In 2022, the system processed £2.9 trillion in value. By 2023, that figure had grown further. The infrastructure is not buckling under demand; it is scaling.
Third, the global context matters. India's Unified Payments Interface processed 117 billion transactions in the financial year ending March 2024, according to NPCI data. Brazil's Pix system, launched in 2020, now handles more transactions than card payments in that country. These are not curiosities. They are proof that when real-time A2A infrastructure is well designed and well promoted, consumer adoption follows quickly. The UK has the infrastructure. Merchant adoption is the missing piece.
This is where honest analysis matters more than enthusiasm.
No chargeback protection. This is the single biggest issue for merchants today. When a customer pays by card and disputes a transaction, the card scheme rules provide a structured chargeback process. A2A payments have no equivalent consumer protection mechanism at the scheme level. If a customer claims goods were not delivered and they paid via open banking transfer, the merchant bears significantly more risk. The PSR has acknowledged this gap and is working on a dispute resolution framework, but it is not fully operational across all providers.
Limited consumer awareness. Despite 11 million open banking users, most UK consumers have not consciously paid a merchant via open banking checkout. They have used it for account aggregation or budgeting apps. Presenting an A2A option at checkout introduces friction for customers who are unfamiliar with the flow, which can increase cart abandonment.
Refund complexity. Card refunds are familiar and relatively straightforward. A2A refunds require the merchant to initiate a separate payment back to the customer's account. This is technically simple but operationally requires good systems and processes, particularly for businesses with high return volumes like fashion retailers.
Device dependency. A2A checkout typically requires the customer to authenticate via their banking app on their mobile device. For customers using desktop browsers, or for older customers less comfortable with mobile banking, this can create a poor experience.
Regulators are deeply interested in A2A as a mechanism to reduce the UK's dependence on the Visa and Mastercard duopoly. The PSR's Five-Year Strategy, published in 2023, explicitly identifies A2A as a priority area for competition. The FCA's Open Banking Roadmap supports this direction.
The PSR has also been investigating card scheme fees, publishing its interim findings in 2023 and noting that interchange fees paid by UK merchants rose by over 30% between 2014 and 2022 in real terms. This regulatory pressure on cards, combined with active support for A2A infrastructure, signals that the direction of travel is clear. Regulators want viable alternatives to card payments, and they are building the policy environment to support them.
For merchants, this means A2A is not a fringe technology. It has institutional support at the highest level of UK financial regulation.
The honest answer is: it depends on what you sell and who you sell it to.
A2A payments make strong sense today for:
A2A requires more caution today for:
The strategic move for most UK merchants is not to replace card payments with A2A. It is to offer A2A as an additional option, particularly for higher-value transactions, and let customers self-select. This captures the cost savings on a portion of your transaction volume without disrupting the experience for customers who prefer cards.
Calculate your current card processing cost. Take last month's processing fees and divide by total card revenue. If your effective rate is above 0.8%, A2A is worth exploring seriously for high-value transactions.
Ask your payment provider whether they offer open banking checkout. Many acquiring relationships now include this as a feature. You may already have access to it.
Start with B2B customers and invoice payments. These are the lowest-friction A2A use case because business customers are already comfortable with bank transfers.
Watch the PSR's VRP timeline. Commercial VRPs are coming. If your business relies on recurring billing, this will matter significantly.
Do not present A2A as the only checkout option. Offer it alongside cards. Customers who choose it save you money. Customers who prefer cards still complete their purchase.
A2A payments are not the future. They are the present, growing quietly and structurally. The merchants who understand this early will spend less per transaction, improve their margins, and be better positioned when consumer familiarity catches up with the infrastructure that is already there.
That 13% annual growth figure is not a projection about consumers. It is a projection about infrastructure maturity meeting merchant adoption. Your job is to decide when to be part of that adoption curve.
Sources
Disclaimer
The views and information shared in this post are for educational and informational purposes only and do not constitute financial, legal, or professional advice. While every effort is made to ensure accuracy, Klipy UK Limited accepts no liability for decisions made based on this content. Payment processing rates, regulations, and product features referenced are subject to change. Klipy UK is an authorised seller of Teya payment solutions. Where third-party sources are cited, links are provided for reference; Klipy UK does not endorse or guarantee the accuracy of external content. For personalised guidance on your business payment needs, please contact us directly at editor@klipy.uk.
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This content is published by Klipy UK, a Teya-authorised reseller of payment solutions. The views expressed are for informational purposes only and do not constitute financial advice. All content is the intellectual property of Klipy UK. Reproduction without permission is prohibited.
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