While real-time payments have been on the horizon for some time, the expectation for instant access has extended to disbursements.
As consumers increasingly receive payments like earnings, tax refunds, insurance claims and loan disbursements from corporate and government entities, they are turning to instant payment methods more often, primarily driven by a need for immediate access and the assurance that money is readily available.
A Long-Standing Trend
The shift isn’t a minor trend. The share of consumers who primarily receive nongovernment disbursements instantly has surged nearly tenfold since 2017, reaching 38%, according to the PYMNTS Intelligence report “Digital Transformation and Instant Payments Fuel Business Disbursement Efficiency,” an Ingo Payments collaboration.
The report found that instant payments growth is fueled by a preference for speed, certainty and convenience.
Parents and young generations show a stronger preference for instant disbursement options. A core driver behind this demand is urgency. One in four disbursement receivers reported needing their money in 30 minutes or less. This urgency is intrinsically linked to the certainty that funds are immediately available, combined with financial need.
Consumers cited peace of mind from having funds in their account (32%) and various financial needs (over half cited as most important), such as paying bills, handling emergency expenses, buying essential items or making debt repayments, as key reasons for wanting instant disbursements.
The larger the disbursement, the more likely consumers are to want it immediately, particularly for amounts exceeding $500. Specific disbursement types, like sports betting payouts, also showed high urgency.
This acute need for immediate access translates into an opportunity for financial institutions and service providers. Consumers are demonstrating a growing willingness to pay a premium for faster access to their money, particularly in urgent situations.
Nearly half of disbursement receivers said they are open to paying higher fees for instant transactions when funds are urgently needed. Specifically, 27% are willing to pay a slightly higher fee, and 20% are willing to pay a much higher fee.
This willingness is more pronounced among certain demographics. Young consumers are more willing to pay higher fees for urgent instant funds. While 80% of baby boomers are unwilling to pay more in urgent situations, approximately three-quarters of Generation Zers would pay a slightly higher fee, with 44% willing to pay a much higher fee. Consumers living paycheck-to-paycheck with bill-paying issues are also more inclined to pay slightly (60%) or significantly (26%) higher fees, indicating that financial constraint combined with urgency drives willingness to pay.
Consumers who prefer digital payments are also more likely to receive instant payments often. Their preferred methods for receiving instant funds include direct deposit into their bank accounts, facilitated by options like Zelle and push-to-debit, although the use of digital wallets like PayPal for instant receipts is also growing.
By integrating instant payout solutions, businesses and financial institutions can meet consumer demand and potentially capture additional revenue streams through premium offerings.
The demand for instant transactions in the disbursement space is a fundamental shift. Companies, including employers and service providers, that adapt by integrating instant payout solutions are better positioned to meet consumer expectations, enhance satisfaction and tap into new revenue potential, particularly by catering to the urgent needs of financially constrained and young consumers. Failing to do so risks losing users to competitors.
