Citizen is a Business Reporter client
Account-to-account (A2A) payments are not new: certain types, such as direct debits, have been widely used for many decades. However, it has been Open Banking – the opening up of banks’ customer data – and real-time payment networks that have turned this arrangement into a fully fledged rival to debit and credit cards. Until recently, merchants had no choice but to bear the brunt of the high intermediary fees of card providers. But a tipping point occurred in November 2021, when one of the world’s major online marketplaces first considered not accepting certain credit cards, a year after the cost of card payments for retailers increased globally by 18 per cent to £1.3 billion.
Not only do A2A payments cost less for merchants than those made with cards, but they are also faster and safer. Money transfers between the sender’s and the receiver’s accounts are typically managed through the sender’s mobile banking app. This means the sender is logging into their existing bank app and using their existing banking credentials – a process protected by the intrinsic and rigorous security systems of their bank. Cyber-security is further reinforced by the fact that A2A transactions involve biometric identification via face ID or fingerprint when accessing the device used for making the payment. By removing cards from the traditional payment process, this alternative payment method can also enhance the customer experience and reduce shopping cart abandonment – which is a major pain point when card payment is combined with two-factor authentication.
Founded in 2017, Citizen was among the first companies licensed to provide payments and identity services using Open Banking. As James Neville, Citizen’s CEO and former CTO of Worldpay, explains, when a customer is making an A2A payment, they are first introduced to the transaction by being sent an email or a QR code containing a link to a bank selector screen. Having clicked on their bank’s logo, clients get redirected to their mobile banking app to approve the payment. Typically, an A2A payment such as Citizen’s would be offered as an option either at checkout or in the account management settings alongside a range of other payment methods – although Citizen does also have some clients who offer Citizen’s cardless payments as their sole transaction facility.
For those in the charity sector, every penny saved can make a real difference. In other sectors, such as gaming and trading, it’s the identity verification element of Citizen’s platform that brings the highest value by allowing payments to be linked to senders’ and receivers’ accounts – a vital tool for anti-money laundering.
Surveys suggest that the willingness to adopt A2A payment schemes is currently at about 60 per cent among users of mobile banking apps. However, uptake of the new technology will most certainly be driven by merchants, who see low costs and enhanced security against online fraud as an appealing proposition with a positive impact on their bottom line. Therefore, to incentivise users to switch over, Citizen is launching its own reward scheme which will allow consumers to benefit every time they pay with Citizen.
While other cardless payment methods such as digital wallets and buy now, pay later (BNPL) continue to gain ground in the payments space, Neville is convinced that A2A payments can get – and retain – a big share of this emerging market, thanks to their relevance to a broad demographic (all you need is online banking), as well as the inherent security features and simplicity of use cardless payments provide.
To try Citizen for yourself or to request a demo please visit www.paywithcitizen.com
Originally published on Business Reporter
