While account-to-account (A2A) payments and Open Banking are nothing new anymore, the constant development and innovation of these technologies is still being felt across the landscape all across the world. 

Following the announcement of its partnership with TrueLayer, OpenPayd Head of Banking & Payment Infrastructure Barry O’Sullivan spoke to Payment Expert on the current state of play for A2A payments and which markets are currently flourishing as a result of their implementation. 

Payment Expert: Firstly Barry, can you explain what TrueLayer provides OpenPayd differently for your Account to account (A2A) payments offering in this new partnership? 

Barry O’Sullivan: Partnering with TrueLayer is really exciting because it significantly enhances our A2A payment capabilities. 

TrueLayer’s pan-European network of bank integrations, accessible through OpenPayd’s API, gives our clients the chance to offer fully authenticated bank payments directly within their users’ banking apps. 

With a single integration via OpenPayd, our clients now have access to TrueLayer’s payment coverage across the continent and a user-friendly method for payment initiation. 

PE: What are some of the challenges in 2024 for A2A payments in being able to maintain a frictionless experience whilst also upholding the highest degree of security?  

BO: A2A payments and Open Banking aren’t new, they’ve existed for years now. So Banks and Payment Initiation Service Providers (PISPs) are very familiar with how it works and how to keep payments secure. 

With Open Banking, we’re using the same controls and authentication that banks have developed and perfected for their mobile apps, so there’s a lot of security built into the process. 

Obviously, there’s always a balancing act involved between having as few barriers as possible to making a payment, while also putting in the right barriers and controls to limit the risk of fraud. Fraudsters are constantly adopting new technologies and coming up with more sophisticated methods, so fraud prevention is a moving target for everyone in the industry. 

credit: Shutterstock
credit: Shutterstock

PE: Have you seen any key developments in payment infrastructure to enable more real-time payment rails across the globe? 

BO: Yes, so it’s easy for those of us based in the UK or Europe to overlook, but there have been some huge developments over the last few years in real-time payment infrastructure globally. 

In emerging markets such as Brazil, China, and India, huge numbers of people are using A2A payments as their default payment method, all via their mobile devices.

Last year, Brazil’s real-time payment rail Pix handled over seven times as many real-time payments as the UK’s Faster Payments, for example. It’s exciting for us to see just how much interest and demand there is globally for real-time payments.

PE: Touching on different markets, have OpenPayd observed any underserved countries when it comes to the need for better real-time payment rails and what solutions do you suggest to improve this? 

BO: One market that comes to mind is the US. Despite launching FedNow, the US is still catching up when compared to more advanced markets like the UK and Europe regarding real-time payment solutions. 

In terms of Open Banking, we have definitely seen the UK take an early lead in adoption, whereas other parts of Europe and the US are still lagging behind.

However, it would be misleading to label any market as “underserved”, simply because the norms, behaviours and regulations around payments differ significantly between countries. When it comes to real-time payments, I don’t think there’s any country or regulator that doesn’t see the value in them. 

Some have just moved faster than others to build the infrastructure. It also takes time for end customers to start using real-time A2A payments instead of whatever other payment method they have been using in the past. So there’s no cut-and-dry explanation for why real-time payments have grown faster in some countries than others.

PE: What have been made of PSD3 proposals that were laid out last year and are there any rules and guidelines you would like to see implemented when it pertains to payment processing? 

BO: Last year’s PSD3 proposals aimed to modernise payments and provide more opportunities for non-banks to access payments systems, which could have interesting implications for our industry. 

But the overall message we’re getting is that PSD3 is going to be an incremental change; it’s unlikely we’ll see any changes coming out of it that compare to PSD2, for example. And for the industry, the challenges we’ll be grappling with will still be around how we balance convenience and ease-of-use with the right security and controls.

PE: Lastly Barry, and thank you for your time, is there industry concern that large tech companies such as Apple and Amazon are forming into Super Apps providing their own payment methods, and could this harm smaller operators from flourishing? 

BO: There is certainly debate within the industry about the potential impacts of large technology companies expanding into financial services and payments.

Currently, the tech companies are far from achieving a comprehensive ecosystem that could rival China’s WeChat, for example. But they’re consolidating the front-end payment experience via services like Apple Pay and Google Pay. This could challenge smaller B2C players seeking to own this experience and it does give the tech companies a platform to start bolting more services onto over time. 

However, the payments landscape in Europe and North America is very fragmented, so there’s no guarantee that even a well-funded tech company will be able to radically shift consumer behaviour. And so, while there’s definitely a short-term challenge for smaller players, the long-term effects are uncertain.