The modern workforce is changing. From the gig economy to business expenses, employees raised on smartphones expect employers to deliver their money in the same way – with speed, flexibility and on-demand. Companies must meet these new expectations in order to maintain their competitive appeal while balancing it against standard business pressures for streamlined operations and cost savings.
In the second installment of the #KillTheCheck series, Drew Edwards, CEO of Ingo Money, highlights ways companies can use push payments to help employees get more of what they earn, faster while significantly trimming their back-end check-writing costs and operations.
Push payments, Edwards says, are in effect “payments in reverse. [It] is just turning those rails around that are used to pull money from my account and … make them inbound rails so that I, as a consumer, can receive money.”
The transactions use the same card numbers, or login credentials, and use that data to pay someone with “instant, irreversible funds directly into their bank account the same way money comes out and the way you send money.”
Using this existing infrastructure in reverse enables companies to eliminate check writing and avoid the associated cost and delay. In return, consumers can take receipt of instant, safe-to-spend funds directly into any type of account – PayPal, Amazon, wallet, credit card, prepaid card.
These benefits can be applied to a wide range of one-time payment uses cases for employees, from travel and expenses to payroll to other reimbursements. Instead of mandating these through traditional payroll channels and windows, businesses can position them as expanded benefits.
Other types of payments can extend across freelance work as the gig economy continues to gain steam, and some laborers “work, literally, just one day at a time.” At thousands of locations, said Edwards, payroll checks are still issued for a single day’s work. There’s a time friction associated with all of this, as there isn’t immediate access to funds upon issue of a paper check.
Even as technology can help kill the check, it can also be used to help kill the receipt, which when it comes to employee disbursements, tend to accumulate, get lost, or are presented en masse in a jumble of paper and request forms. But, Edwards said, disbursement platforms, coupled with, say, image capture, can help streamline the process between incurring an expense and getting paid for it.
Using a hypothetical example of a construction company with workers far afield, tied to a project such as building a Walmart, Edwards explained that the simplest way for the worker to get reimbursed would be to enable them to scan in their receipts for approval, and then once approved, to sign on to a white label solution like Ingo, where even though “we are not involved in … submitting receipts and getting approval, we can certainly create an environment for that employer where the employee gets a text or an email stating that ‘This $280 in expenses has been approved, how do you want to get paid?’”
The employee can then authorize that payment to be loaded onto a card of their choice. “Making that [service] available now is as simple as a check payment,” with the requisite steps of finding partners, putting an API in place and making it relatively easy for companies to put into their business processes.
But that’s not to say that the mechanics behind the scenes are simple, as Edwards noted, because getting into payments involves enlisting the services of sponsor banks, solving for risk management and compliance, engaging and integrating with a multitude of network endpoints and building supporting functionality such as intelligent routing, account validation, and more, into the solution. In reality only the largest companies have the staff and the money to take on building their own payments ecosystems from scratch.
“The gateway is important, even if you are one of those big giants,” Edwards says, because as consumers embrace push payments, they will expect delivery into accounts far beyond just Mastercard or Visa. He said that by example, Ingo has 21 different network integrations right now and can push funds to more than 4.5 billion consumer accounts. “The back-end work that goes on until we reach pure ubiquity is also more than many companies want to sign on for.”
Key differences in such a system include the fact that payments must be done on demand and instantly, which is not at all to be confused with just making payments faster. “You also need [to partner with] someone who has reach beyond just your bank account,” and with a complete solution he said. “If I were to put out an RFP,” he told PYMNTS, “those are the things that I’d be looking for.”