The world of payouts is evolving. The reasons consumers receive payouts from businesses have changed just as much as the payout methods that recipients prefer. With the business-to-consumer (B2C) payment market expected to reach $19.89 trillion USD by 2026 1, the idea that ACH and paper checks are still the only payout methods is outdated. Checks and ACH are slower than digital alternatives, delaying the time it takes consumers to access needed funds. Checks are also more expensive, creating costs for businesses but also saddling fees on unbanked consumers, who may pay check cashing fees in order to access their money. To that end, neither checks nor ACH meet the needs of all recipients.
Government agencies and private business must recognize that the manner in which they disburse money to consumers should be inclusive for all of society to promote the well-being of underserved groups. By digitizing how money is paid out, organizations can better meet the needs of recipients through more inclusive payment options.
With the digitalization of their payout options, businesses are able to lean into a financial ecosystem that is evolving to be more inclusive. Organizations can enable business-to-consumer and government-to-consumer payouts that occur instantly while also providing recipients with the power to choose how their money is received. These methods can include:
- Traditional payouts to a debit card, or bank account via ACH
- Payouts to non-bank platforms, such as crypto wallets to platforms like PayPal and Venmo
- Payouts that cater to unbanked and underbanked consumers, such as payouts via digital checks or prepaid cards
Digital payouts help ensure that all recipients can receive funds quickly, safely and cost-effectively, without prejudice to social standing. To that end, the economic health of a community, particularly the underserved, receives a significant boost when consumers in that community have access to digital payment options. For example, according to the World Bank’s 2021 Global Findex Database, global regions with access to digital payments and mobile money see significant benefits. In particular, women with access to digital payments were 9% less likely to be in poverty and their consumption was 18.5% higher than those areas with limited access to digital services.2
As further proof, The World Bank and Harvard joined forces to complete a field experiment where payroll accounts were introduced to an unbanked population of factory workers in Bangladesh. The control group of workers continued to receive payments in cash while the treatment group received funds digitally into a bank or mobile money account. The study concluded that individuals who received payments digitally into a bank account or mobile money account were able to:
- learn how to use the account without assistance
- begin to use and rely on account options and features
- learn how to avoid paying fees
Not only did the study find that recipients were able to “learn by doing” but also the belief that digital payments helped create a more equal, stable financial environment. In addition, the findings indicated that digital payments lead to an increase in financial education and experience within the unbanked population resulting in financial firms being less likely to overcharge inexperienced customers.
In an era dominated by digital innovation, financial technology (fintech) companies play a crucial role in shaping the future of payments. Fiserv, a leading global provider of financial services technology, is a key player in advancing digital disbursements, building solutions that place a strong emphasis on financial inclusion, acknowledging that payments should be accessible to all segments of society.
Fiserv offers a Digital Payouts solution that is built with financial inclusion in mind. The Carat from Fiserv platform provides multiple integration methods and configurations to help ensure that all clients and their recipients can participate in the digital payment world. With multiple disbursement methods and international capabilities, the platform is leading the way in innovation to create a more stable economic society for the world.
To learn more about our Digital Payouts solution, contact a Carat expert today.
1. Fortune Business Insights.“ With 24.4% CAGR, Digital Payment Market Size worth USD 19.89 Trillion in 2026.” September 19,2022. https://www.globenewswire.com/news-release/2022/09/19/2518187/0/en/With-24-4-CAGR-Digital-Payment-Market-Size-worth-USD-19-89-Trillion-in-2026.html
2. Avinash Marajh and Terrance Gallagher. "Using Digital Payments to Push Financial Inclusion." January 4, 2023. https://idbinvest.org/en/blog/financial-institutions/using-digital-payments-push-financial-inclusion
