What are AFT transactions?

In 2024, customers don’t just want the ability to move money around at the speed of light – they demand it.

Whether that’s sending funds to their friends and family, topping up a prepaid card, or loading a digital wallet onto their smartphone, cardholders are seeking ever-quicker, increasingly convenient ways to manage their payments – and you, as a merchant or financial institution, need to be equipping your business with the tools to facilitate those benefits.

But how? Through Account Funding Transactions (AFTs).

AFTs enable merchants to provide customers with a quick, convenient, and versatile way to move money around. While their counterparts, OCTs (Original Credit Transactions) – which we’ll also touch on in this article – allow merchants to issue refunds and make disbursements simply, securely, and with complete traceability.

Below, we’re exploring what AFTs are, why you should use them, and the wealth of benefits they offer for merchants and customers alike. Then, we’ll look at how Checkout.com can help you unlock AFTs’ benefits for your business and customer base.

What are AFT transactions?

An AFT (Account Funding Transaction) is when a payment service provider – like a bank or financial institution – debits funds from a cardholder’s Visa or Mastercard account to fund a separate (non-merchant) account.

It’s a form of ‘pull’ transaction, in which the payment service provider reaches into the cardholder’s account to ‘pull’ the funds. (With their permission, of course: the sender still controls when the funds are taken, and how much.) In contrast, a ‘push’ transaction is one where the provider sends funds somewhere else – ’pushing’ them to their destination.

AFTs are used in many circumstances, including:

• Adding funds to, or topping up, prepaid card accounts
• Transferring funds to another account (such as a savings account)
• Acting as a funding source for person-to-person (P2P) money transfers
• Loading third-party digital wallets with a payment card

In an AFT transaction, the cardholder initiates a transaction through a merchant – let’s say your business. Then, the acquirer (that’s the bank or financial institution you’ve selected to process payments on your behalf) sends an AFT message to the card scheme (Visa or Mastercard).

Following that, the AFT is authorized and executed – making the funds available for your payment service provider to pull them from the sender’s account, before ‘pushing’ them, via an Original Credit Transaction (OCT), to the receiving account the cardholder has specified.

What’s the difference between AFT and OCT transactions?

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An OCT (Original Credit Transaction) is one where the payment service provider – a bank or financial institution, such as Checkout.com – credits a payment directly to a cardholder’s payment card or account.

Unlike an AFT – which, you’ll remember, is a ‘pull’ transaction – an OCT involves ‘pushing’ funds to the recipient, rather than extracting them from their original source.

Through this lens, AFTs and OCTs can be viewed as two sides of the same coin; as occupying back-to-back, equally important places in the transaction cycle. After funds are pulled from a cardholder’s account via an ACT, they’re then sent through an OCT to the recipient.

Why should you use an AFT transaction?

There are many reasons that financial institutions, customers, and businesses – from SMBs to those handling large volumes of transactions – should use an AFT.

AFTs are:

• Fast – typically, much quicker than traditional bank transfers – which makes them a convenient option for merchants looking to make quick payouts or disbursements.
• Handy – for customers, the ability to receive funds directly to their card comes with less hassle than other payment methods or forms of P2P funds transfer.
• Global – you can facilitate AFT payments in every country (currently around 200) in which Visa and Mastercard are accepted, making it a truly worldwide solution.
• Secure – AFTs’ backing by Visa and Mastercard mean they’re safe, reliable, and fully compliant with PCI DSS (Payment Card Industry Data Security Standard) regulations.
• Versatile – AFTs can be used in a wide variety of contexts: including P2P transfers, digital wallet top-ups, prepaid card loading, and marketplace payouts.
• Simple – AFTs take the hassle out of complex payment situations, such as making cross-border payouts and disbursements to overseas countries.
• Traceable – every AFT comes with its own, unique transaction identifier to simplify tracking and reconciliation, and help with accounting and auditing going forward.

What are the benefits of AFT transactions?

AFTs have a wealth of attractive benefits for merchants and customers alike.

Let’s unpack them.

The benefits of AFT transactions for merchants

For merchants, AFTs enable you to manage customer accounts, and ensure they have sufficient funds to complete a purchase. AFTs let you offer your customers a simple, secure way to top up their accounts – such as moving money from a checking account to a savings pot – and complete transactions with speed and seamlessness.

Plus, because funds in an AFT are pre-authorized before they can be used to make payments or purchases, they help you reduce the risk of chargebacks and fraud, and the damaging financial and reputational impact they can have on your business.

They also help you offer a quick, easy payment method for customers who want to prepay for the products and services you offer. This improves the customer experience: boosting their satisfaction levels, while doing the same to your sales and revenue.

The benefits of AFT transactions for customers

For customers, AFTs are what makes the aspects so crucial to a slick modern payments experience – such as topping up a prepaid card, moving money around, or loading a card onto a third-party digital wallet – so simple. With AFTs, it’s quicker, easier, and more direct for consumers to fund their own accounts or send money to family and friends.

Start using AFT transactions with Checkout.com

Since AFT (and OCT) transactions are funneled through the networks of card schemes – be that VisaNet or the Mastercard Worldwide Network – you’ll need to establish a connection to these before you can get started. 

To do that, though, you’ll need to team up with the right payment service provider: an all-in-one payment gateway, payment processor, and acquirer who can enable your business to access the myriad benefits AFT transactions offer.

In other words, a payment service provider like Checkout.com.

We can help your business facilitate and perform AFTs: enabling your business or financial institution to pull funds from a cardholder account and use them to fund a non-merchant account (be that a prepaid card, digital wallet, or to enable a P2P money transfer). On top of this, we can help your business accept a wide range of other, alternative payment methods – and settle in whatever currencies your customers wish to pay in.

Ready to learn more about AFTs, and how Checkout.com can help you unlock their potential for your business and brand? Get in touch with our team of experts today.