What’s Next in Payments and Commerce – 2018 Predictions
February 14, 2018
The Instant Money Economy Takes Off
The instant money economy took root in 2017 and is poised to explode in 2018. Driven by consumer frustration with slow payments and corporate concerns over the cost and inefficiencies of traditional ones, push payments — or instant money — will likely become a default method of disbursement in the year ahead.
Push payments are instant, safe-to-spend funds delivered directly into a consumer’s account using existing payment rails. They function just like any transaction, only in reverse. This means a push payment uses the same cards and accounts people already know and trust, making it easy and familiar for both the payment’s sender and recipient.
Ingo Money completed the first push payment in the U.S. in partnership with Visa in 2013. The industry has since seen a steady drive to adopt this instant money capability. Much of this draws strength from consumer demand for real-time payments. A generation raised on life at smartphone speed does not have the patience for the three- to five-day settlement requirements of traditional ACH or paper check distributions. In fact, a recent PYMNTS.com survey found that consumers rated paper checks 4.4 out of 100 — dead last in a ranking of payment preferences.
This desire becomes a need for the estimated 78 percent of Americans that live paycheck-to-paycheck. They often cannot wait for even same-day settlement. For consumers and small businesses of all types, instant money delivers dramatic budgeting and liquidity benefits. Accept a payment with the push of a button, choose the account where you want it and funds arrive. It’s easy, it’s instant, it’s everything a modern payment should be.
This demand will be met at scale in 2018 because businesses are finally feeling the pressure to deliver. These companies understand they have to close the gap between the way they pay people and the way people want to be paid. A small business owner cannot wait for a loan to fund three days from now — he needs inventory today. A homeowner cannot wait for a check to arrive in the mail from an insurer after a catastrophic storm — she needs funds immediately.
At the same time, businesses have realized the enormous cost benefits that push payments provide. Beyond the customer satisfaction and reputation benefits, deploying a digital disbursement solution streamlines payment operations. Studies estimate that paper checks can cost up to $10 per issued check. Push payments cost a mere fraction of that. They also provide convenience and tracking throughout the transaction that can bring clarity to the entire process. Saving even a few dollars per check, while reducing back office administrative costs and burdens, and all while delighting customers, adds up to a win-win.
For Ingo Money, this is the ongoing realization of our fundamental commitment to digitize money and #KilltheCheck. To date, we’ve turned more than $14 billion in paper checks into instant digital funds on card accounts for consumers.
We will help standardize this across industries in 2018, as the year becomes an inflection point for the instant money economy, drawing consumers and enterprise into alignment.
Early deployments in the airline, insurance, lending and payroll industries will become the norm. No more sharing sensitive bank data with payors, visiting an ATM to make a deposit or waiting by the mailbox for funds. 2018 is the year that money joins the modern era.
CEO at Ingo Money
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