What's behind the rise of account-to-account (A2A) payments?

Of all the payment options available to consumers at checkout – from buy-now-pay-later (BNPL) to traditional point-of-sale (POS) hardware – few are enjoying such emergent popularity as account-to-account (A2A) transactions.

A2A solutions often bypass the traditional barriers that exist within the payments sector – not just from legacy technology, but with fintech too. By enabling payments direct from a consumer's bank account to a merchant's, they are able to make checkout more convenient for customers (by removing lengthy signup processes or forcing them to enter long, complex information strings for example) while ensuring that the cost to merchants is minimised.

We catch up with Lena Hackelöer, formerly of Klarna, who is now Founder and CEO at Brite Payments. We ask her where A2A transactions have come from, and discuss what's on the horizon for her company.

Can you tell us about you and how you got involved in the payments space?

I was first introduced to the space when I joined Klarna back in 2010. I was part of the first wave of people to be recruited for their expansion outside of Scandinavia. It was early in the brand’s journey when the team was just 100-something people. I was fortunate to work on many different projects at Klarna, including building the global B2B marketing and ensuring a successful merger with SOFORT following its acquisition. During my time at the company, and my roles at subsequent businesses in the space, I gained invaluable and varied experience of the payment ecosystem.

Tell us about Brite Payments. What do you offer and how does it work?

During my time in the payments space, I identified that there was a gap in the market for a large-scale, instant payments brand with a strong proposition for both merchants and consumers.

Brite was launched in 2020 to provide instant payments, utilising open banking technology to process account-to-account payments in real time between consumers and merchants. When using Brite, no signup or credit card details are required as consumers can authenticate themselves using only top-of-mind details via their bank’s usual identification method, creating a more convenient user experience. We currently operate across 21 markets in Europe and are connected to more than 3,800 banks within the EU – and are always assessing new markets for expansion!

At Brite, we initiate the payment from the consumer to the merchant, but also take full receipt of the funds for instant processing. For this, we utilise our own banking network across Europe that we use to funnel the funds, to increase speed and cost efficiency.The instant processing takes away a lot of the credit and fraud risk for the merchant and increases consumer convenience, as funds are typically settled within seconds. We also offer instant payouts; which was driven by merchant demand across services such as insurance, consumer loans, refunds, savings, investments and gig economy wages.

What has progress looked like, and what sorts of merchants are you bringing on board?

Since our launch in 2020, we have experienced strong, increasing demand for our instant payment solutions – and we find that this is driven by the consumer preference for speed, ease and convenience, which merchants strive to fulfil.

We have found that there are sectors where the speed and security of payments is one of the biggest, or the biggest, consideration for consumers. Here we currently find the strongest adoption of our products, for merchants to respond to this need and win out over their competitors. Some of the sectors with the most concentrated demand are currently financial services (specifically lending or financial services apps), marketplace business models, insurance and the gig economy.

There's a growing range of payment options available at checkout. How do account-to-account payments benefit consumers?

For the shopper, account-to-account payment makes the transaction process significantly more convenient, particularly on mobile. The convenience is created by the solution’s nature where all you need is a bank account and users do not need to complete cumbersome sign-up forms or downloads. 

Furthermore, there is no requirement to create additional passwords, all you need is the top-of-mind information you would use to log in to your banking app. In isolation, the convenience may appear minor, however, we know that many people are shopping on lots of different platforms on a very regular basis, and the timesaving and ease becomes significant. 

What about for a merchant – what's in it for them?

Account-to-account payments have many benefits for merchants, too. Notably, the cost of payment is both lower and more predictable, particularly in comparison to card payments and the associated complicated pricing models based on card mix. Furthermore, it’s easy to integrate, and facilitates an improved cashflow, which is a crucial factor in the selection process. 

Another significant advantage for merchants is how A2A payment makes their proposition more engaging for consumers in comparison to other providers. The security and convenience that this payment method ensures is a very competitive benefit in the market.

Where are you currently active, and where should we expect to see Brite Payments in future?

Our market rollout began in 2020, and we first launched Brite Payments in Sweden, Finland, and the Netherlands. We chose these markets because their populations had an existing strong preference for account-to-account payments so we were confident that consumers would easily understand our proposition and how we were differentiating from providers they may be familiar with.

Following the strong positive response, we have continued our expansion over the past two years, bringing our current market coverage to 21 in total as of August 2022, with Estonia being the most recent launch. Next on the radar for us is our upcoming launches later this year which will see us reach full coverage in the Baltics – we are really excited to develop our local connections within these countries.

What else is in store over the next 12-18 months? 

We are already experiencing significant growth this year and we are conscious to ensure that the evolution of the business remains aligned to our goal, which is to prioritise user experience.

Over the next 12-18 months, one of our biggest projects will be establishing local operations in our existing markets. These local relationships provide invaluable insights into merchant and consumer feedback and help to continually shape our solutions. We are also working on product launches with specific verticals in mind which we feel are still underserved by current payment options on the market.

One of the biggest benefits we find as a second-generation fintech is being able to draw on the extensive knowledge of our talented team who typically begin their careers in some of Europe’s largest payment companies. We use this diversity in experience to identify and assess verticals that we feel could be better served with an instant payments solution.