As consumers increasingly demand speed and convenience, the ability for businesses to digitize the manner in which they engage customers has become pivotal. Digital-first consumers are immersed in an on-demand economy where same-day services and instant gratification are at their fingertips, a level of convenience that makes the notion of business-to-consumer (B2C) payouts via a check in the mail seem archaic.
Payout technology is rapidly evolving. For years, industries tasked with delivering mass disbursements relied on paper, which is both high-cost and ripe with inefficiencies. Now, with digital payouts, businesses are modernizing antiquated processes by moving to fully digitized engagement. The shift is allowing firms to lower cost, while also adding simplicity and choice for the customers they serve. And the business case for digital payouts continues to get more attractive. According to our research:
- Digital payouts are 60 percent less expensive than traditional checks and wires
- 44 percent of U.S. customers are willing to pay for a digital payout
- 70 percent of U.S. consumers prefer digital payouts
- Digital payouts can drive a 25 percent reduction in payment status inquiries
Making Payouts Operate like the Pay-in
Businesses have long perfected the art of receiving money from customers digitally; leveraging commerce platforms to receive authorization and payment instantly, while enabling consumers to choose how they want to pay. Now, by using a single partner for acquiring and payouts, businesses are able to leverage the same payment infrastructure used to accept payments from consumers to also send B2C payouts to a consumer’s preferred account.
A simple concept on the surface, the ability to payout an insurance claim, rebate, or other payment with the same simplicity has tremendous benefits for both parties. The business reaps efficiencies by leveraging existing technology to simplify payment flows, is able to lower costs, and improve the consumer experience.
For the consumer, the pay-in and payout experiences become consistent – authorize an amount, select payment type, and confirm transaction— whether they are making a $200 purchase, or are having a $50 rebate pushed back to them.
Optimizing Consumer Choice
Every consumer is unique, and many consumers today are choosing to manage their finances in non-traditional ways. Younger generations are increasingly choosing debit as opposed to credit, and many are even turning to digital wallets as a primary means of moving money. Conversely older consumers are often credit-preferred, and even more apt to choose to receive a payout via ACH or check.
With digital payouts businesses can deliver on consumer choice by enabling that customer to choose how and where a payout is delivered, including to a debit card, prepaid card, ACH, digital check, digital wallets like PayPal, or via branded payouts through a social platform like Venmo. Emerging payment options such as crypto (or other popular digital wallets) could also become viable payout destinations in the future as consumer preferences evolve.
Four Emerging Use Cases for Digital Payouts
- Gaming – Players live for the thrill of winning, but a win is only complete once a player’s bounty is received. By enabling digital payouts, a player is able to receive a payout with the same simplicity with which they fund a gaming account – and do so through a single digital interface. As competition in online gaming grows in the United States, the ability to deliver frictionless pay-in and payout experiences has become a core differentiator.
- Gig Economy – Companies such as ride-sharing services face steep competition when trying to attract contractors in a competitive hiring environment. One way gig companies are setting themselves apart from the competition is by offering real-time digital payouts when a job is done. Eliminating the need for a weekly, or bi-weekly pay cycle, digital payouts provide the gig worker instant liquidity, and added flexibility for managing their finances.
- Insurance – Here’s a story many of us can appreciate. Years ago, customers who were in an auto accident or had a home fire had to submit an insurance claim, get it processed, have it reviewed and approved, and then receive payment in the mail many weeks down the road. When times of crisis strain customer finances, waiting weeks to be able to afford to repair your car or house just adds pain to an already trying time.
Today, insurance companies are transforming the manner in which claimants are paid. One example is State Farm who partnered with Fiserv to payout reviewed and approved insurance claims in a matter of minutes – all while giving the consumer control into how those funds are paid.
- Microlending and Neobanking – The digital payout landscape is evolving rapidly. Fortunately, it’s helping industries that traditionally adopt new practices at a more conservative pace advance faster than ever. Technological advances throughout the lending industry make it easier for customers to digitally transfer money, pay bills, and receive payments like mobile check deposits, and now by leveraging digital payouts it is easier for those without traditional bank accounts to receive payouts from businesses to non-traditional accounts.
Offering digital payment solutions that fit each customer’s unique needs opens the door to new markets and new customers. The future of digital payouts is here and benefitting companies and consumers across many industries. We live in a world where you can share news on social media instantly, and where you can order products on Amazon and have them delivered the next day. Real-time is table stakes, and companies that streamline their payouts digitally will simplify operations, enhance experiences, and foster brand advocacy, relegating competitors to the back of the line.
To learn more about the market-leading digital payout capabilities offered by Fiserv, and how businesses are enabling new levels of customer choice through a payout solution that also simplifies settlement, reporting and customer support please contact us today.
