Sekel Tech - TechStoriess.com

There is quite a well-known meme about dial up modems, and only a certain generation knowing what it was like to wait for it to connect to the internet, with the peculiar dial-tone sound. At the time, it felt normal. Slow speeds, dropped connections, and waiting minutes for a page to load were simply part of how things worked. It was only after broadband arrived that people realised how inefficient and fragile the old system had been. The same principle applies to payments today. For decades, digital payments have been defined by cards. Credit cards and debit cards became the default way to pay because they were convenient, globally accepted, and backed by large networks that made disputes and refunds familiar to consumers. Over time, however, that convenience came with complexity. Every card transaction passes through multiple intermediaries, each adding cost, delay, and exposure to sensitive data. What is now unfolding is a shift that is taking us away from that model. Across markets, payments are beginning to move back to the bank. Account-to-account payments, better known as A2A, allow money to move directly from a customer’s bank account to a merchant’s bank account without passing through card networks like Visa or Mastercard. Customers are redirected to their own bank’s app or website, authenticated using the same methods they use for regular banking, and approve a specific amount. The bank then transfers the money directly to the recipient, without the merchant seeing any sensitive data associated with a bank account. This sounds like a return to traditional money transfers, but the difference lies in speed, user experience, and scale. In India, we saw an example of this in the form of Unified Payments Interface or UPI, which was launched in 2016. By 2024, UPI was processing billions of transactions every month, far outpacing card payments in volume. And all this, without merchants or customers having to share card details at every transaction. There are parallels across the globe. In Brazil, Pix, introduced by the Central Bank of Brazil in 2020, enables instant transfers between bank accounts using phone numbers or QR codes. Within three years, Pix overtook cards and cash to become the most widely used payment method in the country. Small businesses loved it because settlement was immediate and fees were minimal, while consumers loved it because transactions were authorised directly within their own bank's interface. Similarly, iDEAL dominates online commerce in the Netherlands. Customers who choose iDEAL at checkout are redirected to their bank to approve the payment. There are no cards involved, no additional accounts to create, and no sensitive details shared with merchants. Today, iDEAL accounts for a majority of online purchases in the country, showing us how, when bank-based payments are designed for the consumers, the consumers adopt them willingly. But now, this shift is becoming visible even in markets traditionally dominated by cards. In the United Kingdom, for instance, Faster Payments and open banking based “pay by bank” options are increasingly offered at online checkouts. In the United States, services like Zelle allow users to transfer money directly between bank accounts, bypassing card networks entirely. While adoption patterns differ, the underlying direction is consistent. There are several forces driving this change. Cost is one of them. Card transactions typically involve merchant discount rates that can range from 1.5 percent to over three percent of the transaction value. These fees accumulate quickly, especially for high-volume businesses. A2A payments, by contrast, often cost a few cents per transaction or are free for the end user. Speed is another factor. Card payments take a certain period of time to be settled. A2A payments allow for real-time or near-real-time settlement. But the most important factor, especially in today's day and age, is data exposure. Card payments require customers to share credentials such as card numbers and security codes. If compromised, these details can be used repeatedly across platforms. A2A payments change this risk profile. Since customers authenticate directly with their bank, no reusable credentials are shared with the merchant. Each transaction is approved individually. From a data protection perspective, this allows for more effective data minimisation, which means collecting and sharing only what is strictly necessary. Merchants receive confirmation of payment, but not sensitive financial information of the customer. This has broader implications beyond fraud, especially at a time when regulations around data protection are becoming stricter. In India, the Digital Personal Data Protection Act places clear obligations on organisations to justify why they collect personal data, how it is used, and how it is protected. Payment methods that inherently limit data sharing automatically reduce compliance complexity and risk. When less sensitive data flows through the system, there is less to secure, audit, and eventually delete. For businesses, this is more of an infrastructure choice than a checkout optimisation feature. As more consumers become comfortable paying directly from their bank accounts, and as regulatory scrutiny around data handling increases, A2A payments move from being an alternative option to a strategic one. What makes this shift remarkable, however, is how quietly it is happening. There is no single moment when cards stop working or banks suddenly take over. Instead, through systems like UPI, Pix, iDEAL, and emerging pay-by-bank frameworks, payments are gradually returning to where trust has always been strongest, which is the bank. Article Contributed by Mr. Rakesh Raghuvanshi, Founder & CEO, Sekel Tech

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Are Bank-to-Bank Transfers Cheaper and More Secure Than Card Payments?

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