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In the world of instant money movement, it’s past time for A2A to catch up with P2P.
Digital banking account holders increasingly expect the convenience of instant peer-to-peer (P2P) transfers, which entail sending or receiving money from one of their accounts to another person or organization’s account.
But most account-to-account (A2A) transfers, in which consumers move funds between their own accounts at different financial institutions, are far from instant. That’s because A2A transfers still largely rely on automated clearing house (ACH) or wires that can take days to complete, and that can only be finalized Monday-Friday.
Financial institutions (FIs) that offer instant A2A transfer options using the Real-Time Payments (RTP®) and new FedNowSM payment rails can differentiate their offerings from competitors, increase overall account holder satisfaction, and better appeal to millennial and Gen Z consumers raised on instant digital gratification—all while boosting revenues from optional fees.
The Core Benefits of Faster A2A Transfers
- Instant – Users no longer have to wait to access their own funds when moving them between accounts, as opposed to checks, ACH and even wires.
- Always available – The RTP® and FedNowSM payment rails are available 24/7, as opposed to ACH and wires, which only process Monday-Friday.
- Safe & secure – FedNowSM and RTP® are managed by the Federal Reserve and The Clearing House (respectively) and have stringent measures to move money securely. In addition, working with your digital banking provider and its payment partner (such as Alacriti), offers secure payment processing with multi-layer fraud detection.
Tap into High Demand for Instant A2A
With the demand for instant A2A transfers being so high, we believe it will likely soon be an expected, baseline offering. In the Visa survey, respondents reported holding an average of eight financial accounts and making 15 transactions between them each year. That adds up to $3 trillion in A2A transfers annually. And U.S. account holders want to move that money as quickly and easily as possible: nine in 10 say they want real-time transfers to be the standard.
Tapping into this demand is as simple as offering account holders two A2A transfer options. One pioneer of this approach is PayPal. When users receive funds in their PayPal account and wish to transfer them to their primary bank account, PayPal lets them choose a free ACH option that can take a few days, or, for a small fee, they can take advantage of an instant transfer.
If you are on the Alkami Platform and add the real-time option, your digital banking users can go into our transfer widget and execute instant transfers to external accounts,” says Jeff Bucher, senior product manager at Alkami. “There are a couple of ways users can link their external account, including via an instant account verification option or through micro deposits to an external account using the account number and routing code.”
Instant A2A Use Cases
FIs can create a similar structure for their A2A transfer product, and promote the following instant-transfer use cases to account holders:
Transferring funds between checking/savings and brokerage accounts
Whether transferring money from a primary checking or savings account to an internal brokerage account to fund investment purchases, or moving funds from the brokerage account to their regular bank accounts, an instant transfer option can make all the difference for account holders who might otherwise miss out on time-sensitive opportunities under the old transfer process that could take several days to complete.
Transferring funds between accounts at different FIs
Instant transfers can help meet the real-time money management needs of account holders looking to move funds between accounts at a primary and secondary FI. With the funds becoming immediately available upon transfer, this use case could help with everything from avoiding overdrafts to helping small business owners move cash from their personal account to resolve unexpected liquidity issues.
Transferring funds into and out of digital wallets
Account holders who have digital wallet accounts such as Venmo or PayPal can execute real-time transfers into their checking or savings account to get immediate access to their cash. Though, this action may trigger fees on the account holder from Venmo or PayPal.
Transferring funds from a parent/guardian to child/dependent
In cases where a parent or guardian holds a joint/co-account with their child or dependent, the parent or guardian can use an instant A2A transfer to move funds from a solely owned account to the jointly named account in an emergency or other circumstance where speed is of the essence.
To learn how your bank or credit union can get started with instant A2A transfers, check out Alkami’s on-demand A2A webinar.