The 2019 Bridge to 2020
April 12, 2019
An End To The Real Time Payments Drought
Japan was the first country to launch a national real-time payments system … in the 1970s. Since then, the rest of the world has been playing catch-up. Over the last decade, those efforts have accelerated in places like the United Kingdom and Asia-Pacific.
In the United States, our national payments system has continued to languish, despite repeated explorations and initiatives to jump-start it. But consumers and companies have begun to press. The reality is they won’t wait – they’re impatient and want real-time payments now.
Those desires are well-documented. A 2018 survey by the Aite Group found that 65 percent of U.S. consumers said instant payments are important. According to a just-released PYMNTS Disbursements Satisfaction Index, the call for real-time payments is growing even more urgent, with 74 percent now demanding immediately available, safe-to-spend payments and 73 percent wanting choice in disbursement options.
Most companies today have remained tone-deaf. In its survey of executives, Forrester Consulting found that 93 percent of companies still pay customers with paper checks and ACH, despite overwhelming consumer demand and most companies’ inherent desire to embrace digital payments for satisfaction and bottom-line gains.
Fortunately, the days of paper checks and ACH are nearing an end. Soon, the idea of setting up an ACH transfer or heading to the bank to make a paper check deposit will seem antiquated.
Real-time disbursements have quietly arrived, and will become the single most in-demand payment technology over the coming decade. Powered by push payments and delivered by private enterprise as an answer to consumer demands, this capability has steadily been making inroads for select use cases.
This is especially true for business-to-consumer (B2C) disbursements. As an industry, we are on the cusp of this capability shifting from a competitive differentiation for early adopters to a table-stakes offering across multiple industries.
Today, sectors like insurance, lending and gig economy are leading this transition. These early adopters make sense as use cases for borrowers needing funds or homeowners awaiting an insurance payout, who need payments to arrive with urgency. Similarly, the very nature of gig economy employment holds a sense of immediacy that carries through to payment.
As a result, companies like Marcus, LendUp, Uber, Safelite Auto Solutions and many others have begun embracing push payments. In return, they are seeing improvements in customer satisfaction ratings, lowered operational costs, streamlined back-office functionality and even new revenue-earning lines of business.
These benefits cannot remain secret for much longer, and will create demand in adjacent industries. Already, pioneers in arenas like merchant settlement and treasury bank operations have begun to deploy push payment and instant money solutions.
As the calendar year 2019 closes and we emerge on the threshold of a new decade, it will be widely accepted that real-time payments have arrived in the U.S. through the back door – and that businesses must now adopt or get left behind. When that rush begins in earnest, the country will become a pioneer not for its state-sponsored real-time network, but rather its private enterprise system of push payments.
CEO at Ingo Money
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