Publication Date: June 27, 2019
Author: Robert Clayton
Meeting ‘Instantaneous’ Expectations Through Digital Disbursements
In a world where instant gratification is king, Freddie Mercury’s famous lyrics have never rung truer: “I want it all, I want it all, I want it all and I want it now.”
That’s the challenge facing many companies today. As demand rises for real-time payments, consumers, gig workers, employees and even other businesses want their money—and they want it now. Consumer appetites have been whetted by the ease of peer-to-peer transactions, allowing them to pay for bills, pitch in for a collective gift or pay back a loan from a friend, seamlessly and easily. The prevalence of faster payouts is forcing brands to provide payees the ability to choose how they will be paid, when they’ll be paid, and to get the money digitally transferred in a moment’s notice. With this shift, frictionless payouts are quickly becoming more of an expectation than a luxury.
As paper checks decline in importance (total dollar value down by 25% in four years1), the number of different ways merchants can disburse funds to workers and consumers is growing, and so are the benefits. For example, merchants who leverage digital disbursements over traditional paper checks see a 25% decrease in call center volume, increased customer satisfaction and loyalty, and reduce their overall cost of payouts by 60%.2
Yet even with these benefits, changing is not easy. Businesses are striving to create frictionless disbursement experiences for their customers and employees that reach their preferred destinations, and they must make sure those payouts are fully funded and secure. The payments process associated with sending funds from point A to point B can introduce complexities that few providers can handle efficiently – and inefficiency in the payout process almost always nets out to one thing…an unhappy payee. Today’s consumers expect to receive funds rain or shine, with credit available immediately, and for the transaction to occur just as smoothly on Black Friday as it does on a Tuesday in July.
Who Benefits from Quick Disbursement of Funds?
As a payment provider with a well-established network of partners covering card brands, debit networks and issuers, First Data’s ability to disburse funds directly to debit assures merchants that the payment will be sent when requested, funded, delivered securely and completed, even on a holiday.
Here are several scenarios where secure, reliable instant payments are becoming a must:
- The Rise of the Independent Worker: The freelance workforce is growing three times faster than the overall U.S. workforce.3 Without a regular weekly paycheck, freelancers and independent contractors are demanding shorter payment timelines, which require a more flexible disbursement strategy. Merchants who adjust to support faster and broader payout options improve their standing in the marketplace.
- Accelerated Insurance Claim Payments: When things go awry, people naturally turn quickly to their insurance companies for financial help. Even once a claim is approved, a payout can take weeks or even months, a severe disadvantage for those of limited means or who have just suffered a devastating loss. Insurance companies are rolling out helpful mobile applications that are transforming the customer engagement process. By implementing a single API making that seamless connection between the insurer’s mobile application to First Data’s digital disbursements platform, insurers can make the instant claim payment a reality.
- A Substitute for Cash Tips: As physical cards and digital wallets become customers’ preferred payment options, more restaurants are keeping less cash on hand. But when it’s time to divvy up tips among their employees, restaurants with limited or no cash are challenged to provide it. First Data’s intuitive payee portal or the Electronic Payroll Delivery Services from Money Network® allows restaurants to seamlessly draw funds from accounts to pay out the tips at the end of each shift.
- Instant Jackpot Winnings: Lucky instant lottery winners are subject to cumbersome payout processes inside the stores where they purchased the ticket; the same can be said for casino winners bringing in lump sums of cash. Merchants offering lottery purchases can seamlessly pay out their winners directly to a debit account through First Data’s digital commerce technology, and do it securely employing tokenized payment data.
- Seamless Medical Trial Payouts: For selected patients participating in medical trials, generous stipends are paid by check, often weeks after the fact. Medical firms conducting these tests can save up to 60 percent by utilizing digital disbursements vs. issuing paper checks.1
- If you Don’t Use It, Sell It: The rise in renewable energy resources is allowing consumers to sell back unused energy to the utility companies and the grid. Utility companies have traditionally offered few payment options, typically paper checks or ACH direct deposit. But as more consumers look to earn money on their unused energy, utility companies will benefit from simplifying the payout process through digital means.
Why It’s Time to Work With a Partner Like First Data
Merchants want to offer more payout options, but their current providers may not be able to keep pace for a variety of reasons. That’s because the provider:
- Has a small partner network
- Employs inefficient payment methods that cause delays
- Creates a cumbersome back-end process for connecting to multiple payout endpoints
- Doesn’t implement rigorous security processes to avoid compromising the payment
First Data merchants don’t experience these problems. In fact, First Data offers more disbursement endpoints than any other provider, with exclusive access to Money Network® Cards, as well as gift cards, wallets, and debit cards. Accessing this payout network is simple; merchants only need a single API connection to First Data’s disbursement gateway to enable any payout endpoint. But working with First Data isn’t just a simple integration and broad offering. We are experts in payouts and have been leaders in this space for a long time, with experience across use cases, and processing payouts for some of the world’s largest merchants.
With First Data, merchants can put themselves on the fast track to enable infinite payout endpoints, simply and securely. Simply put, it’s what customers want.
1 Aite Group – “Business-to-Consumer Disbursements in the U.S.: Market Overview, February 2019”
2 First Data and client-provided data.
3 CNBC.com – “4 gig economy trends that are radically transforming the US job market, October 29, 2018”