Welcome back to Payments Post. Last month’s edition was all about banks; this month’s is about “paying by bank”. Or to be a bit more semantically precise, account-to-account (A2A) payments. We were particularly interested in Visa’s Visa+ initiative, iDEAL’s apparent pan-European future, and Plaid’s upcoming payouts product. Regular contributor Justin Pituch digs in this week with colleague Andrew Liang, a Boston-based team member.
Justin Pituch
Let’s start off by talking about Visa+. We’ve observed networks like Visa and Mastercard moving beyond their traditional card network business for some time now, not because the card system is declining somehow, but rather because these networks are now technology companies with an ever-expanding feature set. A natural avenue for the networks is to expand their capabilities by facilitating non-card transactions. Visa+ is an example of this strategy. Visa is responding to the growth of digital stored-value wallets (e.g., Venmo and Cash App), along with such wallets’ increasingly bank-like capabilities, by providing an interoperability layer connecting wallets, neobanks, and other platforms. This approach is also consistent with their ‘network of networks strategy’.
In addition to launch partners PayPal and Venmo, “Visa partners, DailyPay, i2c, TabaPay, and Western Union, will also integrate Visa+ within their platforms.” Visa touts new use cases like gig worker and marketplace payouts, but that’s probably just the tip of the iceberg when it comes to what an interoperable wallet ecosystem could facilitate. This is definitely a development to keep an eye on.
And as we pointed out, it’s not the only big A2A announcement that caught our eye in April. I’ll punt it to Andrew to talk about European A2A legend iDEAL and, of course, Plaid.
Andrew Liang
While Visa is aiming to achieve A2A fintech interoperability, we are also seeing new A2A investments in Europe as a result of M&A activity. The European Payments Initiative (EPI), created in 2020, made notable strategic plays by acquiring iDEAL and Payconiq International (PQl). iDEAL is the premier ecommerce A2A solution used in the Netherlands. According to iDEAL, “70% of all e-commerce transactions in the Netherlands are paid with iDEAL”. iDEAL is now set to become a standard for A2A ecommerce across the continent.
The EPI A2A payments scheme will join SEPA Instant to support for interoperability between European banks to further advance and streamline instant payments in Europe. Additional features could include BNPL capabilities, digital identity features, and merchant loyalty program integrations. The growth of real time payments at scale has only begun and we’re excited to see what lies ahead in Europe.
Now let’s talk about Plaid. While real time payments are more fragmented in the U.S. relative to the EU, Americans are still eager for real time experiences. Plaid, known for being the connective tissue between banks and fintechs, announced a product called Instant Payouts which leverages The Clearing House’s RTP solution. This allows Plaid customers to initiate real time bank transfers.
Plaid notes they are looking to focus on specific segments such as lending, marketplaces, insurance, and brokerages for Instant Payouts- they hope this solution will accelerate funds access, which will be a welcome development for the 58% of Americans living paycheck to paycheck.
Justin Pituch
And one last thing before we sign off- Glenbrook also seemed to be keen on A2A payments this month. See our latest Payments Views posts by Joanna Wisniecka, Cici Northup, and Elizabeth McQuerry as well as our three-part fast payments Payments on Fire podcast series featuring Pix.
That’s it for this month. We’re looking forward to next month’s roundup. In the meantime, feel free to reach out here.
