The Future of Open Banking and A2A Payments: Insights from Trustly’s CEO

The payments landscape is changing with the emergence of open banking and account-to-account (A2A) payments. In a recent discussion on the podcast Talking Banking Matters, Johan Tjärnberg, CEO of Trustly, shared his insights on these evolving payment systems and the future they promise.

Trustly’s Vision for A2A Payments

Johan Tjärnberg articulated a straightforward vision for open banking, emphasizing Trustly’s robust connectivity infrastructure that connects to banks across Europe and North America. This infrastructure allows access to around 650 million consumers, enhancing their A2A experiences.

According to Tjärnberg, the primary areas of improvement lie in two key aspects:

• Real-Time Banking Clearing Infrastructure: Initiatives like the UK’s Faster Payments and similar efforts in the U.S. (such as FedNow) indicate a global trend towards faster transaction processing.
• Data Quality through APIs: Regulatory pressure and market dynamics are prompting banks to improve API data quality, which is crucial for enhancing the overall A2A payment experience.

Tjärnberg believes that as these infrastructures develop, the consumer experience will improve significantly. However, he stresses that infrastructure alone is not sufficient; technological advancements built upon this foundation will determine success.

Addressing Market Challenges

Open banking and A2A transactions have seen varied adoption across sectors, particularly encountering competition from traditional card-based systems and peer-to-peer platforms. While Tjärnberg notes that gaming and recurring payments exhibit strong A2A use cases, other commerce sectors lag behind.

National systems like India’s UPI and Brazil’s Pix highlight successful A2A implementations, emphasizing that consumer adoption is largely driven by providing exceptional experiences rather than merely the payment method itself.

Product Offerings at Trustly

Trustly’s product diversity reflects its strategic focus on addressing customer needs. Key offerings include:

• Deposit Products: Aimed at facilitating consumer transfers.
• Payment Products: Tailored for retail transactions.
• Recurring Payments: Enhancing traditional direct debit setups by simplifying onboarding processes through open banking capabilities.

Tjärnberg highlighted that many friction points, such as direct debit failures due to manual onboarding, can be mitigated using their technology, driving smoother transactions.

Expanding in the U.S. Market

Since entering the U.S. market via a merger with PayWithMyBank in 2019, Trustly has adapted its approach to align with local consumer behaviors and market dynamics. The reliance on large enterprise clients and innovative solutions in sectors like sports betting has enabled Trustly to generate significant revenue streams.

To compete effectively against established card payment systems, Trustly guarantees transactions for merchants while managing the risks associated with ACH transfers. Tjärnberg noted operational successes with a low loss rate, maintaining profitability despite challenges posed by traditional systems.

Consumer Protection and Fraud Management

The issue of chargeback mechanisms remains a critical topic as these vary globally, impacting consumer recourse against fraud or product disputes. Tjärnberg indicated that Trustly is working within local regulatory frameworks and focusing on partnerships with reputable enterprises to navigate these complexities effectively.

Leveraging Data for Enhanced User Experience

Data plays a pivotal role in optimizing user interactions with Trustly’s platform. The company utilizes information from banks, merchants, and consumer devices to enhance security and service quality. This data-driven approach includes machine learning applications to help assess consumer behavior accurately and prevent fraud.

Partnerships Over Competition

As competition intensifies from tech giants offering digital wallets, Tjärnberg views these organizations more as potential partners than rivals. He expressed optimism about collaboration opportunities that could enrich the payments ecosystem.

Mergers and Acquisitions Strategy

Trustly’s acquisition strategy focuses on enhancing technological capabilities rather than conventional asset accumulation. Tjärnberg emphasized the importance of maintaining a seamless, unified tech platform to ensure effective integration of any new solutions.

A Personal Journey in Payments

Reflecting on his career shift back into a CEO role after a brief hiatus, Tjärnberg discussed his passion for the fast-paced payments sector and the unique challenges it presents. His leadership philosophy centers around fostering a strong executive team and maintaining focus on core strategic objectives to achieve growth.

“I don’t think that this [account-to-account payments] is a consumer adoption issue. As long as you can provide a great experience, a great product to these use cases, adoption will happen,” said Johan Tjärnberg, Group CEO of Trustly.

With his extensive background in payments and commitment to innovation, Tjärnberg is poised to guide Trustly through its next phase of growth in a rapidly evolving financial landscape.