As cash usage continues to decline, Australian retailers are increasingly paying an eye-watering fortune to cover the cost of payments; it currently sits at around $3billion annually in fees and chargebacks. Then there’s the cost of surcharges that get passed onto consumers to tune of $140 per year, per card.

This is convenient for banks, card schemes, and the major tech companies who own digital wallets, but the rest of us – no thanks.

Globally, account-to-account (A2A) money flows enabled through Open Banking and real-time networks are on the rise. As retailers and consumers grow jaded over unnecessary fees, in addition to problems like card fraud and slow, clunky checkout processes, expect this trend to spread like wildfire across Australia in 2024.

Australia to follow the European model

In the world of payments, the great benefit of Open Banking is the ability to connect consumers directly and securely with their bank – it eliminates the middlemen.

In Europe where Open Banking was pioneered, disruptive technology companies are already delivering what the ‘big guys’ won’t. According to a Statistica report, the growth of Open Banking is so rapid that Europe is expected to see nearly 64 million users in 2024. That’s an increase of over 400 percent in just four years.

In Australia, with the economy still on shaky ground, consumers are more inclined than ever to use ‘real money’. In a recent national study, nearly all Australians (98 percent) stood by cash as the most trusted payment method. A similar number (96 percent) also trust debit cards; however, 13 percent of Australians don’t trust credit cards ‘at all’, and close to one third (30 percent) lack trust in Buy Now Pay Later options.

Now, we know there’s no going back to a world of physical cash, but we need options that bridge the gap between what we used to trust and how digital money operates today.

Account-to-account payments  offer simple, fast, real money payments at a click. It is the only solution that meets consumers where they are – no cards, no middleman fees, no recalling passwords, no entering or divulging card details. 

Payments also need to meet customer expectations around data security and cybersecurity.

To use Open Banking for payments means registering for the ACCC’s Consumer Data Right (CDR), and this requires huge regulatory hurdles. Open Banking is undoubtedly the most secure payments framework. Consumers can have peace of mind that they are connecting directly to their bank and not handing over personal details to third parties. This is a huge selling point in today’s threatening cyber landscape.

What does account-to-account look like?

Taking Europe as our model, there are three main areas where we will see A2A payments surge:

  1. Recurring payments: setting up clunky direct debits will be a thing of the past. Soon consumers will approve a direct debit in a few clicks and have full control over ongoing payments.
  2. Peer to Peer: no need to find and punch in your friend’s BSB and Account number. Peer to peer payment methods like Sweden’s Swish (actually a collaboration between banks) means people can move money to each other via a phone number or QR-code scan. 
  3. At the retail checkout: Waave’s Pay by Bank is the first local version of checkout payments (online and instore) to use real-time, account-to-account payments. Consumers connect to their bank, select their account of choice, and authorise in a click. Return users can pay in two clicks. At the physical terminal, consumers scan a QR code which connects to a one-click payment approval. This is a big opportunity for retailers to provide a clear alternative to the big end of town with instant, seamless and surcharge free payment options.

In Australia, it’s a matter of months, not years, before account-to-account payments enter the mainstream. Retailers need to be thinking about this, and considering what consumers today need; convenience and speed, control over their digital money, and peace of mind when it comes to security. The argument for moving early on the account-to-account trend is a no-brainer.

Ben Zyl is CEO and co-founder of Waave.