Banks are likely to offer account-to-account (A2A) funds transfers as they seek to capitalize on their investments in online banking platforms, according to Celent Communications. A2A transfers allow consumers to move money in real-time from one bank account to another-either their own or someone else's.
"It is no longer a question of whether banks will offer A2A, but a question of how they will configure the capability," according to Gwenn Bezard, senior analyst at Celent Communications and author of a report, Account to Account Transfers: The New Wave in US E-Banking.
Bezard noted that banks have overlooked the cost savings and revenue opportunities associated with using A2A transfers for casual payments, bill payment, account funding, and e-commerce.
The existence of alternative payment schemes such e-checks and Paypal are pushing banks to offer A2A. While e-checks and Paypal are growing annually at 96 percent and 90 percent respectively, there has been only 43 percent growth for bill payments and 19 percent for credit cards, both traditional bank products. Banks thus need to offer A2A to protect their payments franchise.
ACH payment networks (NACHA's Project ACTION) and EFT networks (NYCE, Star Systems) are racing to support A2A transfers and enroll banks.
In January, NYCE will enable institutions to offer A2A transfers via wireless or wireline phone or Internet-based banking applications, using an A2A platform from PayCast, a Houston-based payments software provider. NYCE will link its core processing architecture, Enhanced Message Structure (EMS), to the PayCast platform.