The three main additional challenges for A2A payments in physical stores

14 / 08 / 2022

Embarking on an exploration of Account-to-Account (A2A) payments, this blog post delves into the intricacies encountered when these transactions shift from online to physical store contexts. Amidst the benefits and challenges of A2A payments, we dissect the specific hurdles posed within brick-and-mortar environments.

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One of the new cardless payment methods is Account-to-Account (A2A) payments via credit transfer from the consumer to the merchant bank account. In our last blogs, we highlighted the benefits and challenges of this payment method offers consumers and merchants compared to traditional payment methods. Looking at the challenges regarding user experience, payment guarantee und payment infrastructure again, we see some significant differences between A2A payments in a web shop or in a physical store. Let's take a look at these differences.  In this blog, we will specifically look at the usage and user experience of A2A payments in web shops vs physical stores, the payment guarantee, and  the interaction with the existing payment infrastructure.


Usage and User Experience

For the use of A2A payments in the store, we can identify the additional need for a specific application on the consumer’s mobile phone. This app should mainly support the transfer of the payment data between the shop’s payment infrastructure and the mobile device. It will also drastically simplify the user experience for the consumer because the registration process will handle the bank and account selection. This data will be stored in the app and already the first payment will be very fast because it starts immediately with the strong customer authentication (SCA). For such applications, we mainly distinguish between three types:

1.       Merchant application: Large merchants will provide their own app which - in addition to  value added services (VAS) like shop finder, product information, shopping lists or loyalty programmes - will also support the final step of the shopping experience, namely the payment for the goods or services. The advantage of such an app is the merchant specific implementation, such as the type of QR code or the combination with the VAS, for instance receiving loyalty points for each purchase. The disadvantage is that the scope is limited to this single merchant. We believe that only large merchants and companies with specific sales processes (e.g. transport tickets) will find their place on consumer’s smartphones in the form of a dedicated app.

2.       Bank application: The use of the bank app would be possible immediately, because the majority of the consumers have already installed and configured their banking app. Moreover, banks are still very high in the trust index of consumers and  consumers would have the same payment experiences for all purchases. The major disadvantage is that the majority of the banks (at least in one country) must support such a payment method and must align to use one standardised QR code to simplify the integration. Currently we still see many different QR codes and most banks do not directly support A2A payments.

3.       Payment application: Major payment players like Paypal, Apple or Google have already launched their global payment app / wallet, in which A2A payments could be integrated. The obvious advantage is the fact that the consumer will be able to pay with that app in many stores with the same user experience. The disadvantage is very often the high fees for the merchant and, as with the banking app, the need for a standardised QR code.

We believe that the battle of the apps for payments will be decided between the merchant and the payment app. Especially the inclusion of payments in a more complex sales process (like ticketing) and the combination with other merchant specific VAS will bring some advantages to such merchant wallet compared to the global payment app.

Payment guarantee

Unlike the usage of A2A payments in a web shop, in the case of a physical store the payment commitment must be given to the merchant immediately, because the consumer wants to leave the store with the goods just after the payment. For web shops in many cases the delivery of the goods is often delayed by one day due to logistic issues, so that the merchant can check whether the money has arrived in his/her account. This will also work for normal credit transfers, because with SEPA the clearing between the consumer and the merchant’s account takes place within 24 hours.

This fact leads to the need of either the usage of instant credit transfers (SCT Inst) or the provision of a payment guarantee through the Payment Service Provider. Looking at the different banks in Europe we see that many already support instant payments, but in many countries banks still charge significant fees from the account holders (consumers) who will only accept to pay for it in very specific situations. The hope is that either the regulator or the banking industry will agree on reducing or - even better - removing these fees to give a push to instant payments.

Until this is the case, the only practicable solution for the near future remains the payment guarantee. Depending on the countries, there are already providers for such guarantee e.g. coming from the field of guaranteed SEPA direct debit payments.

Interaction with existing payment infrastructure

One of the technical challenges for instore A2A payments is how the mobile phone with the app can interact with the shop’s infrastructure (cashier system or payment terminal). This connection needs to be very fast to minimise the cashier process. It needs to transfer either the purchase and data (like amount and IBAN)  to the consumer’s mobile phone, or the other way around, the bank data (IBAN etc.) from the consumer to the merchant. Besides the direction, we also have to distinguish between the different transport channels for this data. The most popular technologies are the QR code and Near Field Communication (NFC).

In the case of the QR code, one device creates a two-dimensional image code containing the data to be transmitted and the other device will scan that code to retrieve the data. This technology requires a camera in the device and takes a little more time, but is very independent and has become very robust in recent years.

With NFC, the sending device uses an antenna to send a RFID signal that can be read by the other device if its antenna is close enough to the sending device (this process is called ‘tapping’). This technology is very convenient and fast, but is not openly supported by all devices. Apple has blocked its API for other usage than ApplePay. So in practice, even if NFC provides the better user experience, it is not used for A2A payments in physical stores because of this restriction at the moment..

Coming back to the QR code and looking at the two directions of the data transfer we distinguish between consumer-presented and merchant-presented QR-code.

For consumer-presented QR code the shopper will use the app to show a QR code to the shop assistant who uses the existing scanner (for the goods) to read this code. It usually contains an identifier of the consumer. All details such as payment data are stored in the merchant back office. The big advantage of this approach is the possibility to use the same QR code for loyalty programs and payment in one step (no double scanning). Furthermore, there is no need to change the payment terminal because it is not involved. All changes are limited to the cashier system, which can also be a disadvantage in some cases.

In the case of a merchant-presented QR code, the display of the cashier system or the payment terminal displays a code that will be scanned by the consumer. The app displays some basic data about the purchase , such as the amount and the merchant name and the consumer will execute the Strong Customer Authentication on the mobile device. The advantage is the frictionless payment process. The disadvantages are the dependency on consumer behavior and device functionality during the scanning and the poor user experience in combination with loyalty.

Both options have their justification and their specific use. They will probably exist in parallel. Payment apps will probably tend more towards the merchant-presented codes because loyalty is not their main functionality and the providers very often also have influence on the payment terminals. Merchant app supporting loyalty and couponing could focus more on consumer-presented code to deliver the best user experience.



Summarising the specialty of A2A payments in physical stores, we see the advantages of this new payment method, but also the challenges that have to be solved. All things considered, we believe that this payment method will be most attractive for the following merchant groups: 

    -  Large merchants with their own app including value added services such as loyalty

    -  Merchants with digital shopping experience (e.g. ticketing in transport)

    -  Merchants with larger payment amounts (low fees)

    -  Merchants supporting self-checkout executed by consumers


Learn more about our Account-to-Account Payments solutions.



Profile Henrik Hodam

Henrik Hodam

Senior Product Manager Open Banking, Worldline
Henrik Hodam has been working for Worldline since 2001 and has experience in mobile and digital, as well as in the payments, banking and telecom industry. As Senior Product Manager in Open Banking, Henrik is responsible for Account-to-Account Payments, Verification of Payee and SEPA Proxy Lookup service.