Beyond the Credit Card: Enterprise Retailers Slash Payment Costs with Direct A2A Settlement

The transition to an A2A (account-to-account) payment method is a strategic decision; it directly affects a company’s bottom line, liquidity, and operations. Changing a company’s financial infrastructure can disrupt day-to-day operations. A payment is done through a sequence of authorisation, clearing, and settlement, digitally, with a fee that could be different from method to method.

Comparing business payment methods

A company’s financial officers deal with every critical step of payments and always aim to get low-cost transactions and focus on ROI payments, which means they use a strategic approach in which a payment is not treated as an administrative expense but as a revenue driver or cost optimiser. This method optimises payment performance by maximising transaction approval rates, reducing processing and interchange fees, minimising cross-border costs, and automating fraud and dispute management to decrease manual labour.

Optimising DSO (days sales outstanding) and capital efficiency are the main factors to consider when choosing a payment method for clients and other businesses.

How credit cards work in business

In earlier days, credit cards were used as high-velocity capital tools and had diverse structural steps, fees, and timelines for completing business transactions.

A payment within the country

A system with the identical currency is easy to deal with, as buyers, sellers, and banks operate quickly through a single financial system.

The cash flow commenced by entering the card details with the supplier's checkout system, which can be a VISA business card or Mastercard Corporate.

After this, the digital process started. The bank sends a request to transfer the money through the issuing bank.

After checking the limits and card amounts, they approve it and fund the supplier.

This process takes 1 to 2 business days, and no fee is charged for the transaction. But getting a business card incurs 1% to 3% additional charges. (Seaman, 2024) Credit card holders also have to maintain the minimum amount, the disruption of which leads to additional payments in the form of interest. (Credit Card Interest Rates and Minimum Payments, 2023)

Overseas Card Payments (cross-border payments)

Overseas businesses deal with different currencies with fluctuating exchange rates. There are some issues noted as currency volatility, import-export charges and many more things.

It takes 3 to 5 business days to complete an overseas payment, a long time due to the time zone differences and banks' security checks.

The International card is already a premium-fee-charged card issued by a bank. There are two types of fees charged on an international transaction: one is a cross-border fee, which is 1% to 1.5% charged by the card network, and the second one is a foreign transaction fee, which is 1% to 3% charged by the issuing bank. The total fee can range from 4% to 6%. The global transaction method is commonly known as SWIFT.

How A2A payments slash payment costs

This is made possible by open banking technology. Setting up an A2A payment method typically starts with the user signing up on a fintech app with basic details like name and date of birth, then linking their bank account by entering information such as the account number and bank branch code. A one-time password (OTP) is sent to the user's registered number to confirm the connection, after which the user sets up a payment PIN to authorise future transactions. In India's UPI system, for example, this PIN is known as a UPI PIN, but the same basic pattern (bank linking, OTP verification, PIN authorisation) applies across most A2A systems globally.

A2A payments within the country

B2B payment portals and banking API is used to send and receive funds directly, and it only takes a minute to remit funds.

Digital apps that provide the facility of transferring funds in the meantime charge no fee on any transaction.

Example: UPI in India, ACH in the US and SEPA in Europe.

Overseas A2A payments

Modern fintech local-routing rails take minutes and hours to complete the international transaction, which is way cheaper, as often under 0.5% to 1%, which is only the foreign exchange markup.

Example: Airwallex, Tipalti, Nium and XFlow

A2A payment method is safer as it doesn’t provide the 16-digit number, CVV, and expiry date to include in any payments; it simply uses the user’s biometric and the data is protected.

Warning: Still, a safer place also has a loophole, as in this method, payment is strictly done in minutes, which is a drawback because if a payment is made, you can’t reverse it. In any business, finance is a very critical department; a minor mistake leads to millions in losses.

Conclusion: A2A payments are permanently disrupting credit card domination and building a real-time ecosystem by eliminating card fees, instant fund transfer, radical fraud reduction and open banking maturity. There are many upcoming strategic steps like integrating real-time APIs, incentivising checkout behaviour and bridging the rewards gap.