Large U.S. firms make and receive nearly twice as many real-time payments as midmarket ones, and they’re reaping the benefits to a much greater degree as a result.
In fact, reluctance to offer real-time payments could actually be putting smaller companies at a competitive disadvantage, according to “Accelerating the Time to Realized Revenue,” a PYMNTS and Mastercard collaboration based on a survey of 400 corporate executives.
Get the report: Accelerating the Time to Realized Revenue
In the month prior to the survey, real-time payments accounted for 9% of the payments made by large U.S. firms and 8% of the payments they received, but only 4% of the payments midmarket firms made or received.
The report defines large firms as those with more than $1 billion in annual revenue, and midmarket ones as those with $20 million to $1 billion in sales.
The findings show that midsized U.S. firms are twice as likely as their larger counterparts to be forgoing any operational benefits they stand to gain from adopting real-time payments. This “adoption gap” between the real-time payment usage prevents many midsize companies from realizing the benefits that come from better cash flow management, 24/7 year-round access, enhanced reconciliation and increased transparency.
The more streamlined the biller can make payment, the more likely they are to cement customer loyalty — and improve revenue visibility, Ron Shultz, executive vice president of Global Bill Pay Product Development at Mastercard, told PYMNTS in a June 14 interview.
Additionally, customers are increasingly concerned about the energy used in producing paper bills and processing checks — and that gives billers a new way to incentivize consumers to make the leap to digital channels, Shultz said.
“There’s a strong connection between the top line, the customer experience and loyalty, which all ties into a representation of who you are and what kind of service you deliver to your customers,” Shultz said.
Forty-one percent of all U.S. firms use real-time payments in some capacity, with the average among them using real-time payments for 7% of all business-to-business (B2B) payments they make and 6% of the B2B payments they receive.
In total, each firm makes roughly 3,678 B2B payments and receives 7,235 via real-time payments rails per month.
Yielding Real Results
This signals that although real-time payments are not firms’ principal way of making or receiving payments, they are nevertheless a critical part of the broader B2B ecosystem.
Real-time payments have yielded real results for the businesses that have adopted them. Those that have implemented real-time payments into their wider operations report seeing enhanced flexibility, better transparency, speedier reconciliation and many other benefits.
Nevertheless, misconceptions about real-time payments’ risks prevent many businesses — especially midmarket businesses — from adopting them.
Firms interested in adopting real-time benefits would benefit from educating both their own teams and their business partners on real-time payments’ benefits, their capabilities and their limitations.