Digital payments continue to expand, and so do the ways money moves between accounts. One area gaining attention is the account funding transaction, or AFT. For businesses, understanding how AFT payments work can shed light on new opportunities to serve customers, reduce friction, and improve financial flows. This guide breaks down how AFT transactions operate, where they are used, and what they mean for merchants looking to improve their payment strategies.
Understanding account funding transactions
Account funding transaction defined
An account funding transaction, often called an AFT transaction, is a type of funding transaction that moves money from a cardholder’s payment card into another account. Instead of paying a merchant for goods or services, the cardholder uses their card to add funds to a digital wallet, a prepaid card, or to an account held at a financial institution. These AFT payments are enabled by card networks such as Visa or Mastercard, processed by a payment service provider, and recorded with a unique identifier for traceability and reconciliation.
How AFT payments work
- Initiate funding. The cardholder selects top-up or transfer on the merchant’s site or app, whether that’ is a merchant wallet, a marketplace balance, or another platform account.
- Provide details. The cardholder enters their payment card details or uses a saved token, then chooses the amount and, if applicable, the currency.
- Authorise the transfer. The cardholder authenticates the AFT transaction according to issuer rules, for example, with 3D Secure or other strong customer authentication.
- Submit the request. The payment service provider sends an AFT request through the card networks to the issuing financial institution.
- Issuer decision. The issuer checks available funds and controls, then approves or declines. An authorisation code is returned.
- Post and credit. The funding transaction is posted, a unique identifier is assigned, and the receiving account balance is updated for use.
- Settle funds. Funds settle according to scheme timelines. Reporting aligns the AFT transaction with its identifier for reconciliation.
- Notify and handle exceptions. Systems notify the merchant and the cardholder of the result. Any reversals, refunds, or disputes are handled per scheme and provider rules.
What’s the difference between AFT and OCT transactions?
While AFT and original credit transactions (OCTs) both involve moving money, their directions differs. An AFT transaction is about account funding: pulling money from a card to load into another account. By contrast, an OCT is about paying out: pushing funds from an account to a cardholder’s payment card. Think of AFT as inflow and OCT as outflow.
Businesses often use OCTs for disbursements like refunds or gig worker payouts, while AFT payments are better suited for digital wallet top-ups, prepaid card loading, or general account funding. Understanding this distinction helps merchants design better payment flows for their customers and reduce unnecessary complexity.
Common uses of AFT
AFT transactions support a wide range of funding scenarios. Some of the most common include:
Top-up and prepaid card funding
Prepaid cards rely on account funding to function. A cardholder preloads a balance through an AFT, giving them the ability to spend within a set limit. Merchants who issue prepaid cards use AFT payments to give customers a smooth prepay experience and minimise reliance on cash or bank transfers.
Digital wallet loads
Digital wallets depend heavily on account funding. A cardholder adds money into their wallet through an AFT transaction, then spends from the wallet balance across multiple merchants. This model is critical for ecosystems where wallets act as the primary payment method.
Person-to-person transfers and payroll disbursements
Many money transfer services use AFT to load funds before enabling a payout. For example, a user funds their account with a debit or credit card via an AFT transaction and then sends that money to another person. Payroll disbursements can also be supported when employers pre-fund cards or wallets used by employees.
Wallet-to-card withdrawals
While less common, AFT can also work in reverse funding situations. Some wallets allow users to withdraw funds back to their payment card, requiring a paired flow with OCT for final crediting.
Marketplace payouts
Marketplaces often need to collect funds and redistribute them. AFT transactions help facilitate wallet or account loads before payouts are executed to sellers. This ensures liquidity is available for subsequent distribution.
Benefits of using AFTs for merchants
For merchants, AFT payments bring tangible advantages:
- Expanded customer choice: Offering account funding options ensures customers can use their preferred payment method, whether that’s a digital wallet, a prepaid card, or direct transfer through a financial institution.
- Improved experience: AFTs give cardholders an instant way to load accounts. The immediacy reduces friction and increases customer satisfaction.
- Revenue reliability: By simplifying the account funding process, merchants see fewer failed payment transactions and more completed loads.
- Lower operational effort: Using a single payment service provider to handle AFT transactions reduces complexity, especially compared to manual reconciliation or multiple vendor setups.
- Support for refunds and chargebacks: AFT transactions integrate into existing systems that manage disputes, so merchants can handle refunds and chargebacks consistently across funding and payout flows.
How to implement AFTs in business
Implementing AFTs requires planning, but the process is straightforward with the right partners.
- Work with a payment service provider – You need a provider that supports AFT payments and has the right connections with card networks and financial institutions.
- Integrate with APIs – Most AFT solutions are delivered via API, making it possible to embed account funding directly into your digital platforms.
- Set up identifiers and reconciliation – Each funding transaction needs a unique identifier to simplify tracking, refunds, and reporting.
- Consider regulatory requirements – Depending on the market, AFTs may involve compliance obligations such as KYC checks when linked to digital wallet services or prepaid card issuance.
- Plan for chargebacks and refunds – Just like any other payment method, AFTs may be disputed. Building in chargeback handling ensures you are prepared.
When integrated properly, AFT payments give merchants new ways to engage customers, streamline account funding, and expand into new revenue opportunities.
Powering account funding in digital payments
As account funding becomes more central to digital payments, many merchants look for a payment service provider that simplifies adoption. PSPs like Antom empower businesses with APIs that support wallet top-ups, transfers, withdrawals, and settlement flows across currencies and accounts. Combined with advanced risk management and flexible settlement, this allows you to scale account-related payment operations globally while focusing on your core business.
