HSBC Invests in Token.io to Expand A2A Payments Reach
HSBC has made a strategic investment in Token.io, the European fintech that has powered the bank's Open Payments solution since 2019.
Token.io specialises in account-to-account payment infrastructure and operates across the UK and European markets. The company's technology enables direct bank transfers through open banking rails, bypassing traditional card networks.
The funding round included participation from Token.io's existing investor base, though neither party disclosed the investment amount or valuation details.
Partnership expansion beyond corporate payments
HSBC's Open Payments solution currently serves corporate clients, allowing businesses to initiate bank transfers from third-party platforms without redirecting customers to separate banking interfaces.
The service processes transactions through real-time payment systems including Faster Payments in the UK and SEPA Instant Credit Transfer across Europe.
The expanded partnership will see HSBC deploy Token.io's infrastructure for consumer-facing Pay by Bank services. These include peer-to-peer transfers, account funding and loan repayment functionality.
Todd Clyde, CEO of Token.io, says the investment "will accelerate Token.io's growth and innovation" while advancing "our shared vision of making Pay by Bank a mainstream payment method."
Market growth projections drive adoption
Pay by Bank transactions eliminate interchange fees typically associated with card payments, reducing merchant costs by approximately 50 basis points compared to debit card processing.
The payment method also reduces settlement times from two to three days to near-instantaneous completion.
Authentication occurs through customers' existing banking applications using strong customer authentication protocols mandated under the revised Payment Services Directive. This removes the need for merchants to store sensitive payment credentials.
Industry data suggests Pay by Bank volumes in Europe increased by 30% during 2024. Analysts project that three-quarters of European consumers will use Pay by Bank regularly by 2029.
E-commerce adoption is expected to position Pay by Bank as the second-largest digital payment method in Europe by 2030, trailing only digital wallets in transaction volume.
Infrastructure supports pan-European coverage
Token.io's platform connects to more than 4,000 banks across the UK and European Economic Area through standardised open banking application programming interfaces.
The company's infrastructure supports multiple authentication methods including biometric verification and one-time passcodes.
The platform processes transactions through local payment schemes including the UK's Faster Payments Service, Germany's RT1 system and the Netherlands' iDEAL network.
Manish Kohli, Head of Global Payments Solutions at HSBC, says the investment “reflects the trust and confidence we have in their team and technology, and our firm belief in the role that innovative Open Banking solutions play in transforming the payments experience for both corporates and consumers”.
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