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Visa claimed it prepares to introduce a specialized solution for financial institution transfers, missing charge card and the typical straight debit procedure.
Visa, which along with Mastercard is just one of the globe’s biggest card networks, claimed Thursday it prepares to introduce a specialized solution for account-to-account (A2A) settlements in Europe following year.
Users will certainly be able established straight debits– purchases that take funds straight from your checking account– on vendors’ ecommerce shops with simply a couple of clicks.
Visa claimed customers will certainly have the ability to check these settlements a lot more quickly and increase any type of problems by clicking a switch in their financial application, providing a comparable degree of defense to when they utilize their cards.
The solution needs to assist individuals handle troubles like unapproved auto-renewals of memberships, by making it less complicated for individuals to turn around straight debit purchases and obtain their cash back, Visa claimed. It will not at first use its A2A solution to points like television streaming solutions, fitness center subscriptions and food boxes, Visa included, yet this is prepared for the future.
The item will at first introduce in the U.K. in very early 2025, with succeeding launches in the Nordic area and in other places in Europe later on in 2025.
Direct debit migraines
The trouble presently is that when a customer establishes a settlement for points like energy expenses or child care, they require to fill out a straight debit kind.
But this uses customers little control, as they need to share their financial institution information and individual details, which isn’t protect, and have actually restricted control over the settlement quantity.
Static direct debits, for example, require advance notice of any changes to the amount taken, meaning you have to either cancel the direct debit and set up a new one or carry out a one-off transfer.
With Visa A2A, consumers will be able to set up variable recurring payments (VRP), a new type of payment that allows people to make and manage recurring payments of varying amounts.
“We want to bring pay-by-bank methods into the 21st century and give consumers choice, peace of mind and a digital experience they know and love,” Mandy Lamb, Visa’s managing director for the U.K. and Ireland, said in a statement Thursday.
“That’s why we are collaborating with UK banks and open banking players, bringing our technology and years of experience in the payments card market to create an open system for A2A payments to thrive.”
Visa’s A2A product relies on a technology called open banking, which requires lenders to provide third-party fintechs with access to consumer banking data.
Open banking has gained popularity over the years, especially in Europe, thanks to regulatory reforms to the banking system.
The technology has enabled new payment services that can link directly to consumers’ bank accounts and authorize payments on their behalf — provided they’ve got permission.
In 2021, Visa acquired Tink, an open banking service, for 1.8 billion euros ($2 billion). The deal came on the heels of an abandoned bid from Visa to buy competing open banking firm Plaid.
Visa’s buyout of Tink was viewed as a way for it to get ahead of the threat from emerging fintechs building products that allow consumers — and merchants — to avoid paying its card transaction fees.
Merchants have long bemoaned Visa and Mastercard’s credit and debit card fees, accusing the companies of inflating so-called interchange fees and barring them from directing people to cheaper alternatives.
In March, the two companies reached a historic $30 billion settlement to reduce their interchange fees — which are taken out of a merchant’s bank account when a shopper uses their card to pay for something.
Visa didn’t share details on how it would monetize its A2A service. By giving merchants the option to bypass cards for payments, there’s a risk that Visa could potentially cannibalize its own card business.
For its part, Visa told CNBC it is and always has been focused on enabling the best ways for people to pay and get paid, whether that’s through a card or non-card transaction.
