According to research from industry analyst firm Aite Group, companies make more than 1.9 billion payments to consumers annually. These payments – known as disbursements - include insurance claims, rewards, and rebates. They also include payments from businesses to workers. For gig economy workers, freelancers and even employees receiving regular paychecks, digital payment options enable them to get paid faster and, in some cases, as quickly as a wage is earned.
Despite the emergence of innovative payment platforms and technology providers, almost half of disbursement payments are made by checks today, which can be an expensive and slow process.
Digital disbursement solutions solve these pain points, providing multiple fast and secure payment delivery options and simplifying the time-consuming task of paying large numbers of consumers or employees. A digital approach complete with real-time reconciliation and tracking also lets all parties monitor payment status during each step of the process, which can reduce operational overhead and improve satisfaction.
Digital disbursements are designed to help businesses reduce costs and reduce the time required to get funds to the consumer. Money can be deposited directly into the recipient’s own bank account the same day. When consumer financial account information is not accessible, these solutions offer secure tools to gather that information or support payments using social tokens such as emails or mobile phone numbers.
Considering a faster digital way to pay your customers or workers? Here are five things to know:
1. Your competitors are doing digital disbursements.
The digital landscape is fast paced and requires businesses to continuously adapt to remain competitive. There’s a high consumer demand for digital disbursements to replace checks and speed up payments.
Both emerging and traditional businesses are finding that offering faster ways to pay their workers helps them align to the way people live and work today, enabling them to boost employee satisfaction and retention.
2. Your customers and employees are asking for digital disbursements.
Change is driven by consumers– in fact, according to a survey by PYMNTS.com, 62 percent of millennials already use digital payments to send and receive money. What’s more, over half of consumers prefer to get paid via a direct deposit in place of a paper check.
3. Speed of payments matters.
One of the key features that attracts consumers and employees to digital disbursements is the speed in which they receive funds. Digital disbursements eliminate the wait time of receiving a paper check in the mail or waiting for the next payroll cycle to receive a direct deposit.
Tellingly, 84 percent of gig workers saying they would work more if they were going to get paid faster, according to the PYMNTS.com survey.
4. Digital disbursements can be easy.
Incorporating digital disbursements does not have to be a cumbersome, IT-intensive roadblock. When identifying a solution that best fits their needs, businesses should consider the following:
What’s involved in the initial setup?
How easy is it to add enhancements down the road?
What support tools and resources are available?
Is the solution scalable?
Is the solution secure and reliable?
How are regulatory considerations handled?
It’s important to look for an “all-in” solution.
5. Are digital disbursements cost-effective? Yes.
On average, according to Aite Group, it costs a business $5.91 to issue a check, which includes the process of supporting checks from an operational perspective as well as the higher fraud losses associated with checks. If half of the 1.9 billion digital disbursements made annually were converted to digital transactions, that could translate into a $3.3 billion savings for businesses.
Beyond reducing a reliance on checks, a flexible solution that allows businesses to “mix and match” payout options can help strike a balance between managing costs and optimizing customer and employee satisfaction.
With the right payments partner, businesses can outsource the bulk of their payment technology needs, along with operational, risk and compliance support, allowing them to focus on their core business.
Digital disbursement solutions allow businesses to meet expectations for how and when people want and need to be paid. Businesses that employ these solutions can foster satisfaction, reduce turnover and stand out from competitors with payment capabilities that align to today’s fast-paced digital lifestyles.