Currently, half of ecommerce transactions in Australia are settled via debit/credit cards, and bank transfers account for another 12%, according to GlobalData’s Online Consumer Payments Analytics 2023, as alternative payment solutions struggle to gain market share. Pay by Bank account-to-account (A2A) transactions supposedly offer speedier and more secure payments besides saved fees, as funds are moved directly between bank accounts without card processing.

National Australia Bank (NAB) partnered with the UK-based fintech Banked in a bid to boost A2A uptake among merchants. They aim to leverage NAB’s established market presence and existing merchant relationships to deliver improved consumer protection at checkout, including instant refunds and data protection.

A2A is not new to Australia; domestic companies BPAY Group, eftpos, and NPP Australia have been working together since 2022 as the Australian Payments Plus (AP+) company, progressing the nation’s payment ecosystem. Their solution, PayTo, supports Banked in enabling real-time payments directly from customers to merchant accounts. Instant settlements allow more effective payment recovery, increasing companies’ operational efficiency.

GlobalData’s Card Profitability Analytics

NAB aims to promote Pay by Bank payments’ benefits to merchants, given the currently low uptake. Merchant service charge fees on debit and credit card payments in Australia take up a respective 0.5% and 1% of transactions, as per GlobalData’s Card Profitability Analytics, approximately $3bn annually.

Merchants therefore will need to incentivise customers’ switch to gain these benefits. 70% of Australians heard about real-time payments before, with just 22.5% who used it to pay for goods and services, according to GlobalData’s 2023 Financial Services Consumer Survey. If merchants can successfully implement, for instance, differentiated loyalty rewards to shift customers to Pay by Bank, then card payment checkouts are at risk of losing market share in the future.

Blandina Hanna Szalay is an analyst in banking & payments at GlobalData

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