Iceland's A2A Payments Plan: What It Means for You

Michael Johnson · 2026-11-05

Iceland is making a bold move to revamp its payment systems. The Central Bank of Iceland is exploring a new infrastructure for account-to-account (A2A) payments. This would let people pay for goods and services directly from their bank accounts. The goal? Modernize payments and strengthen ties with Europe—even though Iceland isn't in the EU. ### Why Iceland Is Rethinking Payments Iceland's payment landscape is already digital, but it leans heavily on Visa and Mastercard. Tómas Brynjólfsson, Deputy Governor for Financial Stability, warned that relying on a few foreign providers creates risk. If those networks go down, Iceland could face serious disruptions. > "Critically, domestic rails for debit card transactions that played an important role during the banking failures of the Global Financial Crisis have given way to foreign rails," Brynjólfsson said at the Money Live Nordic Banking conference in Copenhagen. "Cash use is very low, and broadly adopted account-to-account solutions have not emerged as they have in many other countries in the region." In other words, Iceland wants more control and resilience. A2A payments would let consumers bypass card networks entirely, using bank-to-bank transfers instead. ### How the Proposed System Would Work The new scheme would set shared technical standards and interfaces. This means banks and payment providers could connect seamlessly, allowing instant transfers between accounts. Importantly, it wouldn't replace Visa or Mastercard—it would work alongside them. - **Shared standards:** Common rules for all participants to ensure compatibility. - **Direct transfers:** Money moves straight from one bank account to another. - **Coexistence:** Card networks remain, giving users more choices. This approach mirrors successful A2A schemes in other countries, like Sweden's Swish or Denmark's MobilePay. Iceland hopes to replicate that success. ### Connecting to Europe's Payment Rails Iceland's plan also ties into its expected participation in the TARGET Instant Payment Settlement (TIPS) service in the second half of 2028. TIPS is run by the Eurosystem and settles instant payments in euros, Swedish krona, and Danish krone around the clock. For Iceland to join, the Icelandic króna would need to be added to TIPS. This would mark a big step toward European integration—despite Iceland's long-standing reluctance to join the EU. In August, Icelanders voted against EU membership yet again, but that doesn't stop them from aligning payment systems. "Iceland is in a unique situation, existing outside the EU and geographically located in a complex area for connecting globally," said Ben Danner, Senior Analyst of Debit at Javelin Strategy & Research. "Officials are seeing the successes of A2A domestic schemes from other countries and want to modernize their payment system towards digitalization. I also think it's about modernizing their cross-border payment system as they plan to connect to the Eurosystem's TIPS service." ### What This Means for Businesses If you run a business in Iceland—or work with Icelandic partners—this shift could affect how you handle payments. A2A systems often mean lower fees than card networks, and faster settlement. But they also require updating your payment processes to accept bank transfers. For now, it's a waiting game. The Central Bank is still exploring, and no timeline is set. But the direction is clear: Iceland wants a more resilient, integrated payment future.