A2A Payments Are Growing at 13% Per Year: Should UK Merchants Start Accepting Bank-to-Bank Transfers?

A2A Payments Are Growing at 13% Per Year: Should UK Merchants Start Accepting Bank-to-Bank Transfers?

Here is a number worth sitting with: account-to-account (A2A) payments processed $525 billion in transaction value globally in 2023, and they are growing at roughly 13% per year. That figure comes from McKinsey's Global Payments Report, and it represents one of the fastest-growing segments in the entire payments industry.

Yet most UK high street merchants have never accepted a single A2A payment. Their customers still tap, swipe, or insert a card. Interchange fees still flow to Visa and Mastercard. And the conversation about alternatives rarely makes it past the finance director's desk.

That might be about to change. And if you run a business in the UK, you should understand what is coming, why it matters, and whether it is actually right for you.

---

What Are A2A Payments, Exactly?

Account-to-account payments move money directly from a customer's bank account to a merchant's bank account, bypassing the card networks entirely. There is no Visa. No Mastercard. No issuing bank collecting interchange. The payment rails are, in the UK's case, either Faster Payments (for domestic transfers) or the emerging open banking infrastructure built on top of it.

You already use A2A payments without thinking about it. Every time you set up a direct debit for your energy bill, or make a bank transfer to pay a supplier invoice, that is A2A. What is new is the push to bring this mechanism to the point of sale, in real time, with the same speed and convenience customers expect from a card tap.

In the UK, this is happening through open banking payment initiation. A customer scans a QR code or clicks a payment link. Their banking app opens. They authenticate with Face ID or a PIN. The payment leaves their account instantly. The merchant receives confirmation in seconds. No card. No network. No interchange fee.

---

The UK Is Already One of the World's Most Advanced Open Banking Markets

This is not theoretical. The UK is genuinely ahead of most of the world here.

The Financial Conduct Authority and the Competition and Markets Authority mandated open banking access for the nine largest UK banks back in 2018. By September 2023, the UK had recorded over 11.4 million active open banking users, according to the Open Banking Implementation Entity (OBIE). Monthly open banking payment initiations exceeded 10 million for the first time in 2023, a figure that has since continued climbing.

The Payment Systems Regulator has made A2A infrastructure a strategic priority. Its work on Variable Recurring Payments (VRPs) — essentially open banking direct debits that allow flexible, pre-authorised recurring payments — is ongoing, with commercial VRPs beyond the mandated sweeping use case now being piloted with major UK banks.

The infrastructure, in other words, is real. It is regulated. It is live. The question is whether it is ready for your checkout.

---

The Cost Case for Merchants Is Compelling

Let us be direct about why merchants should care: card acceptance costs money. Quite a lot of it.

Following the UK's post-Brexit divergence from EU interchange caps, consumer debit cards remain regulated at 0.2% interchange, and consumer credit cards at 0.3%. But the total cost of card acceptance — interchange, scheme fees, acquirer margins, PCI compliance costs — typically lands between 1.2% and 2.5% for most UK SMEs, depending on their card mix and negotiating power.

For a business turning over £500,000 per year in card payments, that is somewhere between £6,000 and £12,500 leaving through the payments line alone, every single year.

A2A payments, by contrast, use the Faster Payments network. The direct transaction cost is a fraction of interchange. Several open banking payment providers are currently offering UK merchants effective rates of 0.1% to 0.6%, with flat-fee structures for smaller businesses. The saving potential is real and it is substantial.

For high-value, low-margin sectors — think camera retailers, independent jewellers, furniture makers, specialist automotive — even moving 30% of transactions to A2A could reclaim thousands of pounds annually.

---

But There Are Real Trade-offs. Do Not Let Anyone Pretend Otherwise.

A2A payments are not a straight upgrade. Any honest assessment has to address what merchants give up.

Chargeback protection disappears. Card payments come with chargeback rights. If a customer disputes a transaction, the card network has a formal dispute process. A2A payments have no equivalent mechanism. Once the money leaves a customer's account, recovering it in a dispute relies on your business's own refund processes and, in cases of fraud, the bank's voluntary reimbursement procedures. The Contingent Reimbursement Model (CRM) code offers some consumer protection, but it is not the same structured guarantee as a chargeback.

Consumer familiarity is still low at the point of sale. Open banking payments for bill payments, subscriptions, and e-commerce are growing fast. But asking a customer in a physical shop to scan a QR code, open their banking app, and authenticate a payment is a meaningfully different experience from tapping a card. For many customers, particularly older demographics, this friction is real.

Not every bank app is equal. While the nine major UK banks must support open banking, the user experience varies. Some banking apps make payment initiation smooth and fast. Others still produce friction. Until this is standardised, your customer's experience depends partly on which bank they use.

Rewards disappear for the customer. A significant portion of UK consumers use credit cards specifically to earn cashback or points. Removing the card from the transaction means the customer earns nothing. For discretionary purchases, this can influence the payment method a customer is willing to use.

---

Where A2A Makes the Most Sense Right Now

Rather than framing this as a binary choice — cards or A2A — the smarter question is: where does A2A add the most value in your specific business?

E-commerce and digital checkout is the clearest current opportunity. Open banking payment links work well for online payments, particularly for higher-value transactions where the percentage saving is most significant.

B2B invoice settlement is an immediate win. If you invoice other businesses, offering an open banking payment link instead of waiting 30 days for a BACS transfer or absorbing a card fee on a £10,000 invoice is a practical, immediate saving.

Recurring customer payments through VRPs (once commercially available) could replace expensive direct debit bureau costs and offer more flexible payment terms.

High-value physical retail — particularly where the customer is a repeat buyer and the relationship is established — is a growing use case. Camera retailers, bespoke tailors, and independent jewellers are early adopters precisely because the percentage saving at £2,000 to £5,000 transaction values is meaningful.

---

What the PSR and FCA Are Signalling

Both regulators are actively shaping the future of A2A in the UK. The PSR's review of card scheme fees — published in 2023 — made clear that it considers current scheme fee structures a concern for competition. Its work on a National Payments Vision, coordinated with HM Treasury, explicitly identifies A2A as a strategic pillar of the UK payments future.

The FCA, meanwhile, continues to support open banking payment initiation through its Innovation Hub and has been clear that consumer protection frameworks for A2A need to mature. The expectation is that VRP dispute resolution and liability frameworks will be formalised before mass-market adoption accelerates.

This regulatory direction matters. It means A2A is not a fringe experiment. The UK government and its financial regulators are actively building towards a world where bank-to-bank payments are a genuine, regulated, protected alternative to cards at the checkout.

---

What Should You Do Right Now?

If you are a UK merchant, here is a practical framework:

1. Audit your current card acceptance costs. Ask your payment provider for a full breakdown: interchange, scheme fees, acquirer margin, monthly fees. If you do not have this number, you cannot make a rational comparison.

2. Identify your highest-value transaction categories. The saving from A2A is proportional to transaction value. A £50 average basket is different from a £2,000 one.

3. Test open banking payment links for e-commerce or invoicing first. The risk is low, the setup is quick with providers like Yapily, Truelayer, or Volt, and you will gather real data on customer adoption before committing to physical checkout changes.

4. Watch the VRP timeline closely. Commercial VRPs could reshape subscription and recurring payment economics within the next 12 to 24 months. If recurring billing is part of your model, this is significant.

5. Do not abandon cards yet. Cards still carry consumer trust, chargeback protection, and near-universal customer familiarity. The strategic move is to add A2A as a payment option, not to replace cards wholesale.

---

The Honest Conclusion

A2A payments at 13% annual growth are not hype. They are a structural shift in how money moves, driven by regulatory intent, genuine cost savings, and maturing infrastructure. The UK is better positioned than almost any other market to lead this transition.

But the businesses that will benefit most are those that approach this with clear eyes: understanding what they save, what they give up, and where the genuine fit is in their payment mix.

The card networks are not going anywhere. But for the first time in decades, UK merchants have a credible, regulated, growing alternative. Understanding it is no longer optional. Acting on it, at least selectively, is increasingly the sensible commercial decision.

---

Klipy helps UK businesses understand and optimise their payment costs. If you want to see a full breakdown of what card acceptance is actually costing your business, we can help you run the numbers.

Sources

1. McKinsey Global Payments Report 2023 — A2A transaction volumes and 13% growth rate: https://www.mckinsey.com/industries/financial-services/our-insights/the-2023-mckinsey-global-payments-report
2. Open Banking Implementation Entity (OBIE) — 11.4 million active open banking users, 10 million monthly payment initiations 2023: https://www.openbanking.org.uk/news/open-banking-reaches-11-million-active-users/
3. Payment Systems Regulator — Scheme and processing fees market review 2023: https://www.psr.org.uk/our-work/card-scheme-and-processing-fees/
4. Payment Systems Regulator — National Payments Vision and A2A strategic framework: https://www.psr.org.uk/our-work/national-payments-vision/
5. Financial Conduct Authority — Open banking and payment initiation regulatory framework: https://www.fca.org.uk/firms/open-banking
6. UK Finance — Payment Markets Summary 2023, interchange and card acceptance cost data: https://www.ukfinance.org.uk/system/files/2023-07/UK-Finance-Payment-Markets-Report-2023-SUMMARY.pdf
7. BIS CPMI — Fast payment systems and A2A infrastructure global review: https://www.bis.org/cpmi/publ/d211.htm
8. Contingent Reimbursement Model Code (CRM) — Lending Standards Board, consumer protection for authorised push payment fraud: https://www.lendingstandardsboard.org.uk/crm-code/
9. The Paypers — Open banking VRP commercial expansion UK update: https://thepaypers.com
10. Fintech Brain Food by Simon Taylor — UK open banking market analysis and VRP commercial timeline commentary: https://sytaylor.substack.com

---

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.