Visa Launches New Tool That Will Make Paying Merchants Directly from Your Bank Account More Secure

Visa has announced plans to launch a new product that aims to make account-to-account (A2A) payments more secure and flexible, bypassing the traditional direct debit system, according to a statement. CNBC.

The service, which will launch in the UK in early 2025 before rolling out to the Nordics and other parts of Europe, will give users an easier and more controlled way to make payments directly from their bank accounts.

New A2A service from Visa

This new A2A service eliminates the need for consumers to rely on credit cards or the current direct debit process. Visa, one of the largest global card networks, revealed that users will be able to set up variable recurring payments (VRP) in just a few clicks, allowing them to manage payments of varying amounts directly through merchants’ e-commerce platforms.

A key feature of the service is the ability for customers to monitor payments and resolve issues via the banking app, providing a similar level of protection to traditional card payments.

The A2A service is designed to address common issues with direct debit payments, such as unauthorized automatic renewals, by providing a mechanism to reverse unwanted transactions. While the initial launch will not include services such as streaming TV subscriptions or gym memberships, Visa has indicated that such offerings are planned in future updates.

Simplification of direct payments

Direct debit payments currently require consumers to provide personal and banking information, often with limited control over the payment amounts. Visa’s A2A product aims to modernise this process by enabling more dynamic and secure payment methods using open banking technology. Open banking requires financial institutions to grant third-party fintechs access to consumer banking data, a trend that has gained traction across Europe due to regulatory changes.

Visa’s A2A system is built on a foundation of open banking, a technology the company strengthened with its 2021 acquisition of Tink, a European open banking service, for €1.8 billion. The move comes after Visa’s abandoned bid for Plaid, another open banking company, which allowed Visa to remain competitive in the rapidly evolving fintech space.

Merchants have long expressed frustration with the fees Visa and Mastercard charge for credit and debit card transactions, known as interchange fees. In March, Visa and Mastercard reached a $30 billion agreement aimed at reducing those fees. By offering an alternative payment option that bypasses card transactions, Visa could potentially reduce its card revenue, although it has not yet disclosed how it plans to monetize its new A2A service.

Visa emphasized that its goal is to provide the best payment options, both through cards and cardless transactions, and that it will continue to innovate in both areas.

Featured image courtesy of Igor Golovniov/SOPA Images/LightRocket via Getty Images

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