Specialist
Executive at Dwolla Inc
Agenda
- Overview A2A (account-to-account) payments – key developments, partnerships and growth potential, highlighting hurdles to US adoption
- Implications of A2A for legacy payments facilitators and payment networks
- Key players driving shift across data aggregators and digital wallets
- Outlook as A2A penetrates B2B and B2C payment flows
Questions
1.
Could you provide an overview of what exactly A2A [account-to-account] payments are? What have been the historical technological limitations to this payment-type and what recent developments have enabled them to occur?
2.
You mentioned ACH [automated clearing house]. What are the payment rails that would be used in this modern take on A2A payments? Instant ACH is rolling out and there’s also RTP [real-time payments].
3.
What’s the state of A2A payments, particularly in the US? Open banking in Europe seems to be slightly ahead. What are your thoughts specifically on the US and the challenges around rolling out open banking and the A2A payments? What are your expectations for penetration in the US in coming years?
4.
What pieces of payment infrastructure are missing to drive A2A adoption in the US?
5.
The unit economics of A2A varies across P2P, B2C and B2B. What are the implications of A2A payments around those three different payment flows and how we should think about the unit economics for each?
6.
What are the broader implications for B2B of A2A payment adoption? How might an A2A solution help alleviate friction points for accounts payable and accounts receivable for B2B?
7.
How would a retailer be set up to receive A2A payments in a B2C use case? I would think most would be around QR codes, but QR codes haven’t caught on in the US, though contactless has. Will the future be digital
wallets and doing these contactless – almost like Apple Pay – to pay retailers?
8.
How would you compare the fees that merchants would pay for an A2A-type transaction compared to what they currently pay for card processing? How might these fees trend longer term, given there are less stakeholders to take a cut and the networks have also been, historically, good at keeping interchange fees steady? Could the payment market become more competitive, driving prices even lower than this low starting point?
9.
Can A2A payment providers have the same type of rewards and loyalty points as companies such as Chase and Amex? Can they be competitive in this respect and incentivise users to use A2A vs swiping their card like they’re used to and getting rewards? Who will be paying for those rewards – the merchant or the payment provider?
10.
How are banks incentivised to encourage A2A payments? I understand that they really benefit from card swipes. Would A2A adoption be about serving customers better and adjusting the process’s slimmer economics, or is there a different reason?
11.
What might be the impact on merchant acquirers – perhaps through changes in acquiring and process fees – of running through A2A vs cards?
12.
Which merchant acquirer might position itself well to manage the shift to A2A?
13.
Who apart from FIS are the key players enabling these kinds of transactions?
14.
Visa plans to benefit from being able to have value-added services, especially with its network-of-networks strategy. Could fintechs instead be the ones providing value-added services such as managing fraud and chargebacks and take away that role from Visa?
15.
Do you think Visa’s acquisition of Tink and Mastercard’s acquisition of Finicity will be enough to insulate them from the power of Plaid and this ecosystem they’re building with all these payment players to build out A2A? You mentioned they have a lot of stronger presence in this regard in Europe. Could they fall in the US market to companies such as Plaid?
16.
Going into facilitating payments would be complete change to Visa and Mastercard’s models. What asset might they pursue if taking this route and really planting themselves in the middle of A2A payments?
17.
Could you elaborate on the Plaid ecosystem, which could drive A2A adoption? To what extent could this erode the share of the volume of payments going through debit and credit cards relative to A2A? How quickly do you expect this to take?
18.
Is there anything that newer companies and fintechs can offer that Visa and Mastercard can’t replicate?
19.
How do you compare A2A functionality over RTP rails or ACH with Visa Direct and Mastercard Send functionality? What’s the key difference, particularly for end users?
20.
Fintech, neobanks and corporate spend start-ups all make their revenue through interchange, which would go away in this scenario. Should we consider this a worst-case scenario for them? How might they shift their business models to benefit or not lose out entirely to A2A?
21.
What’s your outlook for blockchain and distributed ledger technology-type rails? These are similarly instant and without the networks and their interchange fee. Do you consider this a viable option for A2A payments and has a role in the future of payments longer term? Alternatively, do you think ACH and real-time payments will be the de facto rails?
22.
Who might be the winners and losers across the data aggregators, banks, card networks and A2A payment providers?
