By 2029, account-to-account (A2A) payments are projected to reach 186 billion transactions, marking a staggering 209% from 60 billion in 2024, new estimates by Juniper Research show. This growth is expected to be driven by advances in instant payment rails and open banking technologies, which are reshaping the payment landscape.

A2A payments refer to the direct transfer of funds from one bank account to another, without the need for intermediaries such as card networks or third-party payment processors. These transactions typically rely on traditional bank payment systems such as ACH (Automated Clearing House) in the US or SEPA (Single Euro Payments Area) in Europe, bypassing credit card and third-party payment platforms.

A2A payments have increased in popularity in recent years due to their cost-effectiveness, security, and speed. In 2023, they accounted for 7% of global e-commerce payments last year, according to the Global Payments Report 2024 by Worldpay. Countries including Finland, Malaysia, the Netherlands, and Nigeria led the way in adoption, with A2A payments standing as the leading payment method for e-commerce transactions.

Juniper Research predicts that A2A payments will continue to grow through 2028, fueled by the widespread adoption of open banking initiatives across governing bodies worldwide. Asia-Pacific (APAC) is projected to make up for the bunch of these transactions, accounting for more than half of all A2A consumer transactions by then, outpacing both the Americas and Europe.

Real-time payments and open banking fuel the growth of A2A transactions

The rise of A2A payments has been largely propelled by the development of instant payment rails, Juniper Research says. Historically, traditional A2A payments faced delays in fund transfers, often taking several business days through systems like SEPA. However, real-time payment systems such as the UK’s Faster Payments and the US’s RTP (Real-Time Payments) allow for instantaneous or near-instantaneous transfers between bank accounts. This speed has made A2A payments highly appealing for situations where speed is crucial, such as paying bills, transferring money between individuals, or settling business invoices, leading to increased adoption.

While instant payment rails are crucial to the rise of A2A payments, the report notes that open banking is also playing a significant role by providing the secure infrastructure that allows banks and financial institutions to share data with third-party providers.

Open banking enables third-party providers to initiate payments directly from consumers’ bank accounts, allowing for the development of innovative solutions, including payment initiation services (PIS). These third-party services facilitate the initiation of payments directly from a customer’s bank account, offering more seamless payment experiences, particularly in e-commerce.

The adoption of open banking has seen steady growth in recent years, especially in Europe. In the UK, open banking penetration reached 13% of digitally active consumers by January 2024, with small businesses reporting an even higher rate of 18%, according to the UK’s Open Banking Limited (OBL). The agency estimates that there are now 10 million active users of open banking-powered financial tools and payment apps in the UK.

In Europe, about 5% of digital consumers in France, Spain, Italy, and Germany had used open banking in 2022, according to Rolands Mesters, CEO of open banking provider Nordigen.

Globally, Juniper Research estimates that there were a little less than 100 million open banking payments users in 2023. By 2027, that number is projected to reach 400 million, and by 2028, it could approach 600 million.

Europe: A leader in open banking

Europe is recognized as a pioneer and leader in open banking due to proactive regulation, technological innovation and the collaborative financial ecosystem that has emerged in the region.

The bloc introduced in 2015 the Revised Payment Services Directive (PSD2), a regulatory framework designed to foster competition and innovation in the financial services industry. It mandated that banks open their customers’ financial data to authorized third-party providers with the customer’s consent, effectively kickstarting the open banking movement.

The European Union (EU) is now working on an open finance framework, expanding the access and reuse of customer data across a broader range of financial services, including loans, investments, savings, pension schemes, real-estate and even crypto-assets. The European Commission (EC) put forward the legislative proposal in June 2023. The proposal is now going through the legislative process, including discussions and approvals by the European Parliament and the Council of the EU.

These initiatives are part of the EU’s Digital Finance Strategy, a development plan adopted in September 2020 aimed at modernizing the European financial sector by embracing digital transformation. Other key initiatives under the plan include the Regulation on Markets in Crypto-assets (MiCA), the Digital Identity Framework, and the Instant Payments Regulation.

The Instant Payments Regulation, which entered into force in April 2024, requires banks and payment service providers to offer instant payment services in euros, ensuring that transactions are processed within seconds, 24 hours a day, all year round. It also mandates that instant payments must be offered to customers at the same cost as standard transfers.

Though instant payments bring about a number of benefits for both consumers and businesses, the EC estimates that only 11 % of all money transfers in euro are instant. One in three EU payment service providers does not offer them, and some 70 million payment accounts in the euro area do not allow their holders to use instant transfers.

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