Visa introduces a new product that enhances security when making bank account payments.

• Visa announced plans to introduce a new service for account-to-account (A2A) payments, bypassing the traditional direct debit process.
• Consumers can easily monitor their Visa payments and raise any issues by clicking a button in their banking app.
• The product will first launch in the U.K. in early 2025, followed by releases in the Nordic region and other parts of Europe later in the same year.

Visa announced plans to introduce a new service for bank transfers, bypassing credit cards and the conventional direct debit process.

Next year, Visa, one of the world's largest card networks alongside Mastercard, plans to introduce a dedicated service for account-to-account (A2A) payments in Europe.

With a few clicks, users can easily set up direct debits on merchants' e-commerce stores.

Consumers will have the ability to effortlessly monitor their payments and address any concerns through a button in their banking app, providing them with a comparable level of security as when they use their cards, as stated by Visa.

Visa's A2A service aims to assist individuals in dealing with issues such as unauthorized auto-renewals of subscriptions by simplifying the process of reversing direct debit transactions and recovering their funds. Initially, the service will not be applied to services like TV streaming, gym memberships, and food boxes, but this is planned for the future.

The product will first launch in the U.K. in early 2025, followed by releases in the Nordic region and other parts of Europe later in the same year.

Direct debit headaches

Currently, consumers face the issue of having to complete a direct debit form when setting up payments for utilities or childcare.

Consumers have limited control over payment amount and are required to share personal and bank information, which may not be secure.

Advance notice is necessary for any changes to the amount taken with static direct debits, which means you must either cancel the direct debit and set up a new one or perform a one-off transfer.

Consumers will be able to set up variable recurring payments (VRP) with Visa A2A, a new payment method that enables people to manage recurring payments of varying amounts.

Mandy Lamb, Visa's managing director for the U.K. and Ireland, stated on Thursday that the company aims to modernize pay-by-bank methods and offer consumers a digital experience they are familiar with, providing them with choice and peace of mind.

"We are collaborating with UK banks and open banking players to create an open system for A2A payments, leveraging our technology and expertise in the payments card market."

Open banking technology is used by Visa's A2A product, which enables fintechs to access consumer banking data from lenders.

The popularity of open banking has increased, particularly in Europe, due to changes in banking regulations.

New payment services have been made possible through technology, which allows for direct linking to consumers' bank accounts and authorizing payments on their behalf, as long as they grant permission.

In 2021, Visa bought Tink, an open banking service, for 1.8 billion euros ($2 billion) after abandoning a bid to acquire Plaid, a competing open banking firm.

Tink's acquisition by Visa was perceived as a strategy to stay ahead of the competition from emerging fintechs that offer products that enable consumers and merchants to avoid paying Visa's card transaction fees.

The high fees charged by Visa and Mastercard for credit and debit card transactions have long been a source of frustration for merchants, who claim that the companies inflate interchange fees and prevent them from directing customers to more affordable options.

In March, the two companies agreed to a record-breaking $30 billion settlement to lower their interchange fees, which are deducted from a merchant's bank account when a customer pays with their card.

Visa may face the risk of cannibalizing its own card business if merchants choose to bypass cards for payments through its A2A service.

Visa has always been focused on facilitating the best payment methods, including card and non-card transactions.