Digital Payments

Why The Modern Disbursements Experience Must Be Instant ... And Multichannel

There’s a growing awareness among businesses that when it comes to disbursements, we’re moving into an era where consumer choice is king. In much the same way that customers have a slew of options these days when it comes to paying a bill, they also expect to have a choice of alternatives when it comes to getting paid. The trouble is that businesses often misunderstand what really counts as a disbursement choice, Lisa McFarlandIngo Money’s executive vice president and chief product officer, told Karen Webster in a recent conversation.

“A lot of businesses think they offer choice because they offer check payments and ACH,” McFarland said. “For some customers, that's not a choice at all.”

She noted that many consumers lack bank accounts, don’t have their routing or account numbers on hand or merely prefer using PayPal. Those clients can feel left out in the cold by the binary choice of getting paid by check or ACH, McFarland said, as neither really works for them in a friction-free manner.

In fact, when it comes to disbursement methods, the question is more than just which payment options to offer to customers. It also matters whether the options are equally accessible and usable across the various channels in which a business might interact with customers.

For instance, McFarland said that a business can offer choices in payments, but consumers will perceive the experience as inconsistent if firms don’t find a way to do that across all of the channels in which the company operates.

“In our recent surveys, we’ve found that there are a lot of businesses that believe they offer choice in disbursements, yet their customers don't share that opinion,” she noted. “That illustrates the idea that choice is in the eye of the beholder – or, in this case, the eye of the receiver.”

How can companies align their operations with those perceptions of choice? McFarland said that can be a bit complicated, because it involves a multichannel effort that few firms can knock out all at once.

But the good news, she noted, is that most firms that expand their repertoire of choice across all channels find that the work isn’t as difficult as many perceived it to be at the outset.

The 80/20 Problem

According to McFarland, the problem is often that payor organizations fall into a bit of an 80/20 rut that’s hard to climb out of. They start building out disbursement solutions on a channel that will work for roughly 80 percent of their customer base – which is fine as a starting point, but not a finishing point.

“By all means, start with solving the big problem, but know that the 20 percent balance is solvable, and it’s often not nearly as difficult as people think,” McFarland said.

For most organizations, she noted, an 80 percent solution means offering the widest range of payment options for consumers in the digital self-service channel. After all, customers generally look to self-serve as a matter of preference.

And, McFarland added, letting customers serve themselves requires less training and staff time on the payor’s part. By contrast, rolling out new systems, services and options for payment in-person or via a company’s call center requires a fair amount of staff training.

As for the remaining 20 percent of use cases, a growing number of businesses are starting to appreciate that providing various disbursement options in a multichannel environment can accelerate or improve the customer experience in critical situations. In fact, good payouts can even help companies acquire new clients.

For example, McFarland said that when a natural disaster strikes and insurance companies send claims adjusters into affected areas, the ability to disburse claims face-to-face, in real time, and to whatever account a customer can access “is incredibly important. And their neighbors will be aware of that when it comes time to renew a policy.”

In fact, she said, disbursements are one of the make-or-break moments in a consumer’s experience with a company. That means the ability to deliver funds anytime, anywhere and on whatever channel the customer is using can “make all the difference in the world.”

The Importance Of Middleware

McFarland conceded that it can be challenging to get very large or highly siloed organizations aligned with building a multichannel disbursement solution. But while such organizations do face complexity issues, she said, the perception of complexity is often much worse than the actual difficulty involved in modifying a company’s technical infrastructure.

Often, adding a middleware layer can bring consistency to the experience regardless of the technology that's happening in the background, she said. That can allow existing systems to interact with APIs to support the extension of service to a POS, a phone channel or a mobile/digital experience.

“That is often a way that large companies can innovate and drive change,” McFarland said. Using middleware can do this in a way “that actually is consistent [and] holistic, but does not require a wholesale tear-out of all their old infrastructure to replace with something new,” she noted.

And just as importantly, the middleware can translate all of the data associated with a transaction back across an organization and into systems within the requisite parts of the business.

All in all, McFarland said that whether a business is being paid or is paying out, the goal remains the same: “You want to enable the transaction for the customer on whatever channel they choose to interact on, and you want to give them choice and close that sale. And the same is true on the disbursement side.”

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NEW PYMNTS STUDY: ACCELERATING THE REAL-TIME PAYMENTS DEMAND CURVE – NOVEMBER 2020

About: Accelerating The Real-Time Payments Demand Curve:What Banks Need To Know About What Consumers Want And Need, PYMNTS  examines consumers’ understanding of real-time payments and the methods they use for different types of payments. The report explores consumers’ interest in real-time payments and their willingness to switch to financial institutions that offer such capabilities.

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