We have all been out of pocket before for offering to front the cost of a restaurant bill, only receiving half the money back via bank transfer in the coming days with many friends ‘forgetting’ to pay for their share of the bill.
Though account-to-account payments have been around for quite some time, there is still a long way to go in terms of payment innovations for them to be entirely convenient.
The payment method is making its presence felt with endless practical uses, like paying a babysitter or sending money to kids away at university. Account-to-account payments also help provide additional cost savings benefits to Singapore merchants by helping to reduce the cost of payment processing.
According to findings from the newly released Worldpay from FIS 2020 Global Payments Report, account-to-account payments are the third most common payment method in Singapore, making up 10 per cent of all online payments.
When it comes to shopping online, account-to-account payments are also more popular than payments by debit cards (eight per cent) and closely followed by charge and deferred debit cards (six per cent). This is only set to increase as Singapore, an earlier adopter of Open Banking and APIs, continues to push banks to embrace Open Banking.
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Open Banking will make account-to-account payments even more frictionless by providing a way for consumers to authorise payments from a bank account without having to supply their bank account details, all while still helping meet the desired need for security. Many consumers view account-to-account payments as balancing their need for security and their desire for convenience.
Singapore introduced its first Open Banking app in 2017 – NETSPay. The app, created by DBS, POSB, OCBC and UOB, allows users to easily split bills with friends by sending money via a mobile number or QR code.
Other countries in Asia have followed suit, with HSBC introducing PayMe which has enabled 1.9 million people in Hong Kong to pay anyone with just a few taps on their phone.
Account-to-account technologies are on the rise on a global scale too, from Alipay and WeChat in China to Spain’s Bizum, France’s Lydia, Mercado Pago in Argentina or UK-based Neteller. Elsewhere, Apple Cash allows transfers between any two Apple users in the US via an iPhone, iPad, and Apple Watch.
Similarly, PayPal has a solid base as a digital wallet with broad acceptance at online retailers. Google Pay introduced P2P payments to the US market in 2018 and to India in 2019. And India welcomed a wave of new peer-to-peer services in 2019, including Paytm, WhatsApp Pay, and Amazon Pay. Clearly, P2P payment functionality is emerging as a core functionality for the mobile wallets consumers prefer.
As cross border commerce continues to grow, the rise of account-to-account payments shows that real-time payments can provide new pathways for us to pay. While this does bring data privacy issues to the fore, countries worldwide are recognising the need for clear standards and regulations surrounding payment data and customer information.
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In the same way global regulatory trends continue to advance the protection of data privacy, other initiatives such as open banking could provide the additional momentum that takes account-to-account payment innovations mainstream.
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