Another month, another nail in the paper check’s coffin thanks to new disbursement solutions.
But don’t bother to send flowers or plan a memorial service to reflect on the paper check’s legacy. A recent survey found most Americans are ready to put the paper check behind them and embrace more modern payment alternatives instead.
The August edition of the PYMNTS.com Disbursements Tracker™, powered by Ingo Money, highlights several notable developments that explain the waning influence of the paper check, and how new disbursement tools could impact the workplace, pension systems and mobile payment options.
Around the world of Disbursements
Based on how quickly new disbursement tools are being deployed, there is little doubt that the paper check is dying. The question is how quickly could it happen? According to a recent survey from Viewpost, U.S. consumers appear to have different theories on when the paper check may finally bite the dust.
The Viewpost survey, based on input from 1,000 U.S. consumers, found more than half of respondents expect business between customers and companies — such as billing transactions — will eventually be conducted primarily via mobile payment apps instead of by paper invoices. This will, of course, effectively render the paper check dead. But, when will it happen? That, of course, depends on who you ask. The same survey found one-third of respondents believe paper checks will be obsolete in the next five years, while 83 percent of respondents believe the check’s demise will happen in the next 20 years.
As the check’s role declines, more modern payment alternatives are taking off and gaining ground in several global markets. Take a look at the new offering from Indian messaging service Hike, for instance. Hike recently added a digital payments wallet to its app, allowing money transfers between customers using the country’s United Payments Interface (UPI) service. Skype is another messaging service helping users quickly send money to one another using popular payment option PayPal. The partnership between Skype and PayPal enables users to send money to fellow Skype users in 22 countries, including the U.S., Canada and more than a dozen nations in Europe, through PayPal in the Skype mobile app.
Faster loans, happier customers
The faster a recipient can get his hands on his money, the happier he will be. That appears to be the sentiment that’s helped fuel the rise of peer-to-peer (P2P) or marketplaces lending (MPL) platforms. These services quickly deliver funds to borrowers seeking a loan while offering a less cumbersome lending process than that offered at traditional banks. This month’s Tracker includes a deep dive looking into the rise of MPL lending, a market that recently processed $23.7 billion in loans — a CAGR of 120 percent over four years — and how these services could cause banks to examine their own lending practices and further reduce the role of paper checks.
When a small business needs money to expand its services or invest in new operations, it typically needs fast access to funds. Unfortunately, small- and mid-sized businesses (SMBs) that turn to banks will likely find themselves filling out a stack of paperwork and waiting weeks or months to learn if their applications were even approved. But banks that still embrace older application processes are facing new competition from alternative SMB lenders, like OnDeck, which are positioning themselves as fast-acting alternatives to traditional FIs. These alt-lenders can quickly review and approve applications and disburse loans to SMB bank accounts within a day.
For the August Tracker’s feature story, PYMNTS spoke with Andrea Gellert, OnDeck’s chief revenue officer, and Jim Larkin, the company’s vice president of communications and marketing, about how the new players in the lending space could offer banks a new way to reach consumers frustrated by an arduous lending process.
To read the feature story, the Deep Dive and the latest news, download August’s Disbursements Tracker.
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The PYMNTS.com Disbursements Tracker™, powered by Ingo Money, is your go-to resource for staying up-to-date on a month-by-month basis on the trends and changes in the digital disbursement space.