Visa Ventures into Account-to-Account Services in 2025, Portending a New Era in Payments

Visa is preparing to offer account-to-account (A2A) payment services in 2025. The company plans to rollout its A2A platform in the U.K. before expanding to other regions. Visa first announced the move in September 2024. Ryan McInerney, Visa’s CEO, spoke of the company’s A2A strategy during a company earnings webcast in late January. 

“We are still on track to launch Visa A2A in early 2025,” McInerney said. “After we announced it, we’ve done what we always do, which is have a bunch of great conversations with clients and partners and regulators in the U.K.”

It’s a bold move for a company that has built its legacy in the credit card arena. Around the world, approximately 1.3 billion Visa credit cards are in circulation, a figure that represents 37% of all circulating cards. 

To accelerate company growth, it makes sense that Visa would turn to an adjacent payment tool. And the burgeoning A2A industry presents an opportunity the company finds enticing. McInerney said he thinks bringing Visa’s capabilities into the A2A space will greatly benefit the company’s clients and partners.

The credit card market is mature, particularly in developed countries.

In the U.S., more than 80% of adults own at least one credit card and prefer using them over cash to make payments.

But that’s not to say credit cards don’t have their critics. Stakeholders on both sides of a transaction — buyer and seller — have a bone to pick with the credit card industry.

Credit card debt reached a record high during the third quarter of 2023. Cardholders bear much of the responsibility for soaring debt levels as they leverage their cards’ credit limits to make purchases they can’t, or won’t, provide payment for within a statement cycle. But credit card annual percentage rates have also come under fire as of late for being excessively high.

Senators Bernie Sanders (I-VT) and Josh Hawley (R-MO) recently announced legislation that would cap card interest rates at 10%. 

“When large financial institutions charge over 25% interest on credit cards, they are not engaged in the business of making credit available,” Sanders said in a statement. “We cannot continue to allow big banks to make huge profits ripping off the American people.”

The bill Sanders and Hawley proposed drew swift criticism from a number of banking groups, including the American Bankers Association.

Merchants also have a conflicted relationship with credit cards. On one hand, credit cards allow businesses to realize sales they otherwise would have missed out on in instances where shoppers don’t have enough cash on hand, or in their bank accounts, to pay for an item. But merchants must pay processing fees to accept card payments.

Businesses, frustrated with the cost of card processing fees, are increasingly passing them on to shoppers. A recent J.D. Power study found that 34% of merchants add surcharges to credit card transactions. 

Account-to-account payments solve both of these problems by empowering one party to send funds directly from their bank account to another party’s account without involving an intermediary. That means that A2A payments circumvent the card payment rails, leaving exorbitant interest rates and card processing fees in the dust.

Credit card transactions can take days to settle, but A2A payments are processed instantaneously, giving consumers and businesses a real-time view of transactions. That may prove to be a significant incentive to accept A2A payments for merchants who are looking to avoid chargebacks.  

The majority of Americans are suited to make A2A payments. According to a survey conducted by the Federal Deposit Insurance Corporation, 96% of households in the U.S. own an account at a bank or credit union.  

Consumers who are interested in a non-cash payment option can employ A2A payments and avoid the fees associated with credit card use. Account-to-account payments also figure to attract individuals who have a poor credit score that prevents them from accessing many credit cards.

Visa can capitalize on these factors with its A2A platform, but the company won’t be without competition. Zelle is already a formidable A2A provider in the U.S. The company has partnered with many financial institutions to help consumers make direct payments. Mastercard, which is second to Visa with 1.1 billion credit cards in circulation, also figures to be a formidable player in the future of A2A payments. 

At first glance, Visa’s entrance into the A2A space may come as a head scratcher to those who aren’t acquainted with the payments ecosystem. But there’s room for credit cards and A2A payments in the marketplace.

Credit cards offer benefits, including rewards, that thus far haven’t been prominently featured in A2A products.

Alan Marquard, Mastercard’s Head of Transfer Solutions, spoke to the American Banker about how the company views the future of account-to-account solutions.

“Instead of looking at it as a world where we are fighting the ‘card corner’ from A2A encroachment, the trend to A2A payments puts us in a position to serve different use cases and not have to take sides,” Marquard said. “There is a huge opportunity with a global scale for payments that have nothing to do with cards reaching endpoints.”