Account-to-account payments at the point of sale have been discussed as a card-replacement technology for most of the last decade. The infrastructure conditions that make meaningful adoption possible have only recently been met: mandatory instant payment rails across the eurozone, open banking APIs that can initiate payment directly from a consumer's banking app, and scheme-level interoperability frameworks that reduce the fragmentation problem. The question worth asking now is not whether A2A payments will grow, they will, but where in the merchant stack they actually improve the economics, and where the card rail remains the better commercial choice.

What the Infrastructure Looks Like Now

SEPA Instant is the backbone. The EU Instant Payments Regulation mandated receive capability for all eurozone payment service providers from January 2025 and send capability from October 2025. This creates a universal rail, any consumer with a eurozone bank account can receive and send instant payments, which is the necessary condition for pay-by-bank at checkout to work at scale.

The open banking access layer sits on top. PSD2 mandated open banking APIs across the EU; the forthcoming PSR tightens the performance and anti-obstruction requirements significantly. Third-party payment initiation services (PISP licences) allow fintechs and payment providers to initiate payments directly from a consumer's account with a single authentication, no card number, no CVV, no scheme routing.

In the UK, the picture is similar but distinct: Faster Payments provides the rail, and Open Banking Limited has built the interoperability framework. Variable Recurring Payments, which allow A2A payments to be initiated for recurring amounts without per-transaction consumer authentication, are live for limited use cases and expanding. The FCA and PSR are developing the commercial model for VRPs at broader scale, including the merchant-facing fee structure that has been the main commercial sticking point.

Where the Economics Work for Merchants

The primary commercial case for A2A at checkout is interchange avoidance. Card interchange in the EU is capped at 0.2% for consumer debit and 0.3% for consumer credit, but the effective merchant discount rate includes acquirer margin and scheme fees on top, typically ranging from 0.5% to 1.8% for online transactions depending on card type, geography, and merchant category. An A2A payment routes around all of this, the consumer's bank and the merchant's bank communicate directly, and the fee is a fixed per-transaction amount rather than an ad valorem charge.

The merchants where this arithmetic is most compelling share three characteristics: high average transaction values (where ad valorem interchange is a significant absolute cost), low dispute rates (A2A payments are irrevocable, there is no chargeback mechanism), and consumer bases with high mobile banking adoption. Large-ticket B2B transactions, utility payments, insurance premiums, and rent payments fit this profile well. Fashion retail at £40 average basket fits it poorly.

Where Cards Remain the Better Option

Consumer protection under the card rails is meaningfully stronger than under A2A. Section 75 in the UK (for purchases over £100), card scheme dispute rights, and the fraud liability shift under 3DS collectively give consumers rights they do not have on A2A payments. For any merchant selling goods or services where chargebacks are a material risk, travel, digital goods, subscription services, the absence of a consumer dispute mechanism under A2A is a significant barrier to adoption. Consumers know this, even if they cannot articulate it explicitly, and conversion rates at checkout reflect it.

International transactions are also a current limitation. SEPA Instant works within the eurozone. Faster Payments works within the UK. Cross-border A2A payments, a UK consumer paying a French merchant, require either a correspondent banking arrangement or a scheme-level interoperability framework that does not yet exist at the scale needed for general acceptance. Cards work everywhere. A2A does not, yet.

The Acquirer's Position

For acquirers, A2A payments represent a strategic challenge and a distribution opportunity simultaneously. The challenge is obvious: if A2A displaces card volume, interchange-linked acquiring revenue falls. The opportunity is that acquirers with existing merchant relationships are well positioned to distribute A2A acceptance as an additional payment method, keeping the merchant relationship while adapting the revenue model from interchange participation to fixed-fee transaction processing.

The acquirers who will be most exposed are those whose margin model depends on card interchange and who have not invested in building or licensing A2A acceptance capability. The acquirers who will be best positioned are those who treat A2A as a product extension rather than a threat, and who can offer merchants a single integration covering card, A2A, and digital wallet acceptance with unified reporting and reconciliation.

The Consumer Experience Problem and How It Is Being Solved

The persistent barrier to A2A adoption at the point of sale has been consumer experience. Card payments — particularly contactless — complete in under two seconds with no friction beyond the tap. The original open banking payment initiation flow required a redirect to the consumer's banking app, authentication within the app, confirmation of payment, and return to the merchant journey. On a good connection with a cooperative banking app, this took ten to fifteen seconds. On a poor connection or with an app that had not been optimised for PISP redirects, it took longer and occasionally failed.

The latest generation of A2A payment products has narrowed this gap substantially through two mechanisms. The first is biometric-first authentication: where the consumer has enabled biometrics in their banking app, the authentication step within the redirect is a single fingerprint or face scan, reducing it to approximately two seconds. The second is the shift from redirect-based to embedded flows. Open banking APIs now support an embedded authentication model where the consumer authenticates within the merchant interface using app-to-app calls rather than a full browser redirect. The merchant journey does not leave the merchant's checkout surface. Several European A2A payment providers have deployed this flow with sub-five-second end-to-end completion times for returning consumers.

For in-store use, the QR code mechanism has proven more durable than initially expected. The consumer scans a QR code displayed at the point of sale, their banking app opens, and the payment is pre-populated for authorisation. The friction is comparable to contactless for consumers who have used it before, and inferior to contactless for first-time users. A2A in-store adoption has consequently been higher in markets where QR payments were already normalised — the Netherlands, Sweden, parts of Scandinavia — and lower in markets where contactless card adoption is very high and consumer switching costs are correspondingly elevated.

Dispute Resolution: Managing the Irrevocability of A2A Payments

The absence of a chargeback mechanism in A2A payments is both a feature and a risk, depending on which side of the transaction you are on. For merchants with low dispute rates in categories where goods are delivered as described, irrevocability is straightforwardly advantageous: no chargeback costs, no representment processes, no fraud liability. For consumers and for merchants in categories with high return rates or dispute frequency, it creates a different set of obligations.

The PSR's consumer protection framework addresses this explicitly for A2A payments. Where a consumer has authorised a payment that is subsequently subject to dispute — because the goods were not delivered, were not as described, or because the merchant is insolvent — the consumer's rights are preserved against the merchant under applicable consumer law. The PSP is not liable in the way a card issuer is liable for a valid chargeback. The consumer's recourse is to the merchant, and failing that, to civil proceedings.

For merchants operating subscription or instalment payment models via A2A, this means the communication obligations at the point of authorisation are higher than for card payments. The consumer must understand that the payment is irrevocable and that disputes are managed with the merchant, not through the payment provider. In practice, merchants deploying A2A for subscription billing are supplementing the irrevocable payment initiation with separate cancellation and refund policies that mirror what consumers expect from card-based subscription products. The commercial workability of this model depends on the merchant's willingness to manage refund operations voluntarily in the absence of a scheme-mandated chargeback right.

Regulatory Developments Affecting A2A Commercial Viability

The commercial model for A2A payments at scale — specifically the fee structure between the consumer's bank, the merchant's bank, and any intermediary PISP — remains unsettled in the UK and is evolving in the EU. The PSR's approach under PSD3 does not mandate a specific fee for payment initiation; it leaves the commercial negotiation between PISP and ASPSP to market mechanisms, subject to non-discrimination and access obligations. This means the current economics — where many open banking payment initiations carry no interbank fee, making them attractive to merchants but commercially unattractive for banks to enable enthusiastically — may not be sustainable at higher volumes.

In the UK, the Payment Systems Regulator's work on a variable recurring payment commercial framework has included explicit modelling of sustainable fee levels. The working assumption in industry discussions is that a per-transaction fee structure comparable to a low-value debit interchange — in the range of a few pence per transaction — would be commercially viable for banks while still delivering significant savings versus card for high-average-value merchants. The precise fee level and any multilateral interchange-equivalent arrangement will require regulatory approval to avoid creating a new interchange-like structure that simply replicates the card network model in an A2A context.