Real “hockey-sticking” ignition is a fairly rare phenomenon.
Lots of innovators come to market claiming they’re ready to explosively disrupt the status quo, but the number of products that actually do manage that kind of up-and-to-the-right adoption pattern are far fewer in number. In the recent past, there is probably only one technology that has inarguably shown that kind of adoption pattern: the smartphone.
But by the numbers, it is starting to look an awful lot like instant disbursements are about to join the pantheon. As of the closing days of 2019, instant payments are far from an exotic product. According to the latest edition of the PYMNTS Disbursement Tracker, 64 percent of consumers have heard of instant payments and are interested in knowing more.
And perhaps more exceptional than the awareness is actual use. When we asked in 2017 how many consumers have received an instant payment, the answer was a paltry 11 percent. When we asked again this year, that number had skyrocketed to 42 percent.
And counting, Ingo Money CEO Drew Edwards noted in a recent conversation with Karen Webster about the latest results. When it comes to instant payments, he explained, we’re still early on the growth curve. Today, we are still seeing instant payments limited to certain demographic sets and market slices — peer-to-peer (P2P) payments among millennial consumers or instant payroll disbursements for gig workers.
What’s next, he said, is a world where instant payments won’t be unique at all anymore; they will be so ubiquitous that we will probably just be calling them payments — because the instant part will be implied.
“Can you imagine coming up to a gas pump and being unable to pay right there, or pulling up to a fast food place and not being able to choose the drive-thru?” he asked. “I think some things are obviously so much better when it comes to customer experience that ultimately when they are in the market, they are just going to change it. No one wants to pay for gas inside, no one is looking to stand in line for Chick-fil-A, and no one wants to wait on getting paid if they don’t have to.”
And very soon, he said, we may well be in a world where no one has to.
A Question of Availability
When looking at the big jump in instant payments usage over the last 12 to 18 months, Edwards said, the question to ask isn’t why the jump was so big, but why it wasn’t bigger. The simple answer there is availability. When instant payments become available, consumers just adopt them as soon as possible. If they aren’t using them, odds are good they haven’t been offered.
And availability, he added, isn’t as simple as just having a method by which a payee could theoretically accept an instant payment.
“I know for me personally, the worst thing when I have to accept a payment from someone is if I have to sign up for their mobile wallet to make it happen,” he said. “I don’t want another account.”
And others, he said, mostly don’t either. In the early days of P2P when it was a group of friends sitting around a table splitting up a check, that viral model of spread worked. The platform spread because you had a large, friendly group of people who wanted to connect by using it, and it brought instant payments alongside in its wake.
That kind of viral spread, he said, isn’t going to happen with a consumer and their insurance company or with a plaintiff getting paid out a legal settlement. Those are, in most cases, larger payments, regulated payments and fairly rare payments.
Offering really accessible instant disbursements, he said, means the payee isn’t handcuffed to any particular method of payment or final destination for their funds if they want their money instantly — it is a menu of choices presented to the consumer that allows them to select when they want to get paid, and where exactly they want those funds to be delivered.
“That for Ingo was the goal with building our platform — creating the environment where the customer will really want an instant payment because it is as easy as agreeing to receive it,” Edwards said.
The Rapidly Changing World
Making it possible to offer up that kind of accessibility to payees, Edwards noted, is still a work in progress, especially in some industries. Insurance is a place where instant payments progress has lagged where one might think it would have raced simply because of the nature of the industry. An insurance company’s job is at some level to disburse funds, and it is in their interest to do that as quickly and efficiently as possible.
But what is possible, he said, is limited by the very complicated and multi-tier regulations insurance companies face, not to mention their decades-old infrastructure, process and risk management policies that all have to be revised for a very different technological form factor. Or, to put it more succinctly, big ships are hard to turn, and Ingo’s tech was designed to make that task easier.
But the remarkable thing, he said, is that the ship is turning. When he looks at the places where instant disbursements are getting the most traction in 2019, the answer is indisputably the insurance industry. Those in the insurance realm know what has to be done — and now the questions are about how to execute.
“Right now we don’t see the broad usage in places like legal, government or B2B, but it’s coming,” he said. “A lot of progress is going to have to be made around process and risk management for the change to fully happen. But make no mistake, within a few years, I believe it will.”
At the end of the day, it almost has to — because the word is out there among consumers, and the desire is already there. Today’s desire, Edwards said, is tomorrow’s expectation. And tomorrow is coming sooner than initially anticipated.