Account-to-Account (A2A) banking, sometimes also called Me-to-Me banking, is the transfer of funds from one account to another account. While A2A payments typically occur between accounts owned by the same customer, there are several instances in which that is not the case such as a direct debit to pay a utility bill. A2A payments can also be used to transfer funds to and from digital wallets.
The major advantage of A2A payments is that they don’t require an intermediary or a payment instrument like a card to be processed. There are two basic types of A2A payments:
- Push Payments, like bank transfers, which require consumers to manually send or “push” money to another account.
- Pull Payments, like automated recurring debits to pay a bill, where money is “pulled” from an account.
How Does A2A Banking Work?
For A2A banking, the funds transfer can occur between accounts at the same or different banks or even, in some cases, between a bank account and a brokerage account. For A2A transactions, a consumer’s financial institution must have some form of instant payments enrollment.
In the case of a transfer between two bank accounts–even at different financial institutions–A2A banking is straightforward: a customer transfers funds from their savings account to their checking account, for example, the funds are transferred instantly and are available in the checking account right away. This is also how transfers between checking accounts and digital wallets work. Though it is important to keep in mind that not every digital wallet offers this type of A2A transaction, as some digital wallet services still rely on ACH transfers or card payments.
For transfers between a standard checking or savings account and a brokerage account, both financial institutions—for the checking/savings account and the brokerage account—must be equipped to support instant payments. For a consumer with a brokerage account, A2A payments can provide a substantial benefit in allowing them to immediately transfer funds from a checking or savings account to their brokerage account to fund investments in real-time. Historically, transfers to a brokerage account would require consumers to wait several days for the funds to move between their accounts.
To learn more about Faster Payments and Payment Operations, check out these additional resources:
These are the broader payment concepts that underpin payment operations.