Visa is set to enhance the pay-by-bank model with the introduction of Visa A2A in the UK, a rules-based system for managing bill payments and subscriptions, scheduled for early 2025.
In 2023, £3.7 trillion was processed via A2A Faster Payments in the UK, marking a 15% increase from the previous year. Despite this growth, the mechanisms for paying bills and subscriptions through bank transfers have seen little innovation since the direct debit system was established 60 years ago.
According to Visa, the existing model results in billions of pounds being lost or withheld from consumers due to challenges like unauthorized auto-renewals and limited flexibility around bill payments. Visa A2A aims to empower banks and businesses to provide consumers with greater choice and control over how they pay their bills, starting with utilities, rent, and childcare fees, and eventually expanding to encompass subscriptions for digital streaming, gym memberships, and food delivery services.
Key features of the new system include a formal dispute resolution process, biometric security controls, and a straightforward method for setting up and managing payment permissions. For businesses, Visa A2A will facilitate real-time settlement through Faster Payments and provide notifications if a consumer alters or cancels their payment permissions. Additionally, it allows businesses to include more transaction data for reconciliation purposes.
Mandy Lamb, Managing Director of Visa UK and Ireland, stated: “Bank payments are a popular way to pay bills and services but have remained largely unchanged since the inception of direct debit 60 years ago. We aim to modernize pay-by-bank methods to offer consumers more choice and peace of mind. Visa A2A will ensure that consumer-to-business bank transfer payments are protected similarly to card payments.”
Visa is working in collaboration with various banks and payment vendors, including Banked, Modulr, Moneyhub, Salt Edge, Vyne, and Yaspa, to develop the new system.
Pella Frost, Head of Everyday Banking at HSBC UK, expressed support for the initiative, noting, “We welcome an initiative that seeks to standardize the rules, capabilities, and protections for customers using account-to-account payments. Visa is well positioned to build on the success we are experiencing, and we look forward to seeing how it collaborates with the industry to create a secure and sustainable payment experience.”