The rise of Open Banking has paved the way for a FinTech boom, allowing startups to create digital wallets and establish themselves as “Neo Banks”. This transformation has led to digital wallets becoming the dominant global payment method in e-commerce, commanding a 49% market share, as revealed in the Global Payments Report by Worldpay. However, the real game-changer in the payments landscape is the growing popularity of account-to-account (A2A) payments, which have surpassed $525 billion in global transaction value in 2022, thanks to the availability of real-time payment capabilities.
Key Takeaway
The Open Banking revolution has given rise to a FinTech boom, with digital wallets dominating e-commerce payments. Now, account-to-account (A2A) payments are on the rise, surpassing $525 billion in global transaction value in 2022.
A2A Payment Platform Expansion
Embracing the A2A boom are numerous startups, including Trustly from Stockholm, which has successfully raised €23 million to date. However, Trustly may face competition from Brite Payments, a Stockholm-based startup that recently announced a significant Series A fundraise of $60 million. Specialist B2B software investor Dawn Capital led this funding round, with participation from German/US VC Headline and existing investor Incore, a Swedish firm. Brite had previously secured seed funding from non-institutional investor Agof Investments, led by Marcus Blom and Nicolai Chamizo, Brite’s Chairman and Incore’s CEO, respectively.
Brite’s Impressive Growth
Brite, founded in 2019 by former Klarna executive Lena Hackelöer, experienced a breakthrough year in 2022. The company claims to have doubled its transaction volume and revenue, achieving profitability in the process. Currently available in 25 European countries, Brite has made its mark in the region, excluding the UK, which is no longer an EU member. Dawn Capital has a track record of backing successful Swedish fintech companies like iZettle (acquired by PayPal for $2.2 billion) and Tink (acquired by Visa for $2.0 billion). Similarly, Headline previously supported Pismo, a Brazilian payments infrastructure provider that was acquired by Visa for $1.0 billion.
According to Hackelöer, Brite’s payment platform is gaining traction due to its emphasis on instant account-to-account capabilities, differentiating the company from first-generation A2A players. While the UK market matures with its fast payment schemes, Brite focuses on operating across most of Europe, where instant A2A payments are not yet the standard.
The Global Landscape of A2A Payments
A multitude of A2A payment platforms exist worldwide, each with its unique characteristics. Notable examples include Brazil’s PIX, developed by the Central Bank, Canada’s Interac Online, a collaborative solution among major Canadian banks, and India’s Unified Payments Interface (UPI), launched by the National Payments Council and the Reserve Bank of India in 2016. Merchants particularly favor A2A payment platforms due to reduced payment acceptance costs compared to credit cards, along with instant settlement of funds. The trend indicates a gradual shift by consumers away from credit cards towards alternative payment methods like direct credit card use, digital wallets, “buy now, pay later” (BNPL) options, and other point-of-sale financing choices. Although cryptocurrencies remain a minor payment method, the availability of numerous A2A payment schemes suggests this trend will continue to thrive.
A Bright Future for Brite
With the recent funding round, Brite is well-positioned to leverage its resources and potentially scale up or engage in mergers and acquisitions within the industry. Dawn Capital’s General Partner, Josh Bell, believes we are on the brink of Open Banking 2.0, and the mainstream adoption of real-time A2A payments across Europe is imminent, with Brite poised to be the leading player in this category.
