Companies and consumers find convenience in real-time payments

Digital payments increase efficiency and inspire trust in consumers

Paying bills once required a pen, a checkbook, envelopes and stamps. But thanks to new technology and evolving consumer preferences, digital methods are increasingly replacing the analog process of bill-paying, and not just for consumers.

The digital flow of funds is occurring in the other direction, too, as more businesses are embracing the opportunity to make payments instantly, directly and securely to consumers via online methods.

Benefits of direct-to-consumer payments

The growth of the gig economy and other on-demand services means real-time, direct-to-consumer payments are more important than ever before. In 2017, an estimated 74 percent of households in North America with consumers ages 18 to 65 received an online direct disbursement, according to research from Visa², and the total dollar volume of disbursements is up 48 percent from 2014 to 2018 per Aite Group.

Industries such as health care, government, transportation and insurance are already beginning to shift toward direct funds disbursement so consumers can receive payments quickly. For example, homeowners who’ve experienced a fire, flood or other emergency would welcome the ability to receive insurance payouts electronically, rather than having to wait for and process a physical check. This type of transaction is called a “push payment.”

Across industries, more companies are likely to begin offering these push payment options, according to Robin Reodica, product strategy director for Bank of America Merchant Services. “We are collaborating with merchants to solve for faster payments for things like employee tips, student stipends and rebates to customers and business partners,” Reodica says.

For example, following underwriting and approval, lenders can disburse funds immediately to borrowers facing emergencies or pressing needs, such as home repairs or medical expenses.

Another popular use case is funding a delivery driver. The driver joins a service and picks up food orders from restaurants to deliver to customers. The driver is then paid by the service provider at the end of each week for the trips completed. With faster payments, the driver can be paid by the service provider at the time of each completed trip with funds going directly to the driver’s debit card.

“Digital methods are increasingly replacing the analog
process of bill-paying, and not just for consumers.”

Real-time payments enhance business relationships

Consumers want to work with businesses they can trust— and real-time payments go a long way toward building that trust. “For businesses, real-time solutions eliminate manual check-processing, which boosts their efficiency,” Reodica says. “And they can also build customer loyalty by providing speedy payments, trusted payment infrastructure and enhanced security layers.”

Reodica notes that both consumers and small businesses are willing to change companies they do business with if switching means they can receive faster payments—a strong indication that digital payments are here to stay. According to Reodica, “Providing faster payments to consumers, employees, partners and service providers makes the difference in today’s market.”

2014 to 2017 YOY growth in U.S. funds disbursements by payer category

Source: Aite Group survey of 1,663 U.S. consumers in Q2 2015, Aite Group and Visa Inc. survey of 2,379 North American consumers in Q4 2017, and Aite Group estimates

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