Open banking connectivity features are transforming the way consumers receive payouts from merchants, service providers and government agencies. These features allow consumers to link their bank accounts directly, using their existing bank logins, and receive funds instantly.
According to “How Open Banking Can Provide Fast and Easy Consumer Payouts,” a PYMNTS Intelligence and Trustly collaboration, close to half of consumers (42%) most often receive payouts directly to their bank accounts without using any connectivity tool.
This reliance on direct-to-bank transfers means that payouts are typically received within a week, with only 5% of payouts to bank accounts taking 60 seconds or less.
However, although manually providing account details remains common for payouts, consumers are increasingly embracing connectivity features. These tools enable them to directly receive payouts from their merchant or service provider accounts using their existing bank credentials.
As per the survey data, among digital methods, receiving payouts by directly accessing one’s bank account using a third-party connectivity app is slightly more popular than digital wallets at 28% and 27%, respectively.
Venmo, a popular peer-to-peer payment app owned by PayPal, exemplifies this trend. With about 90 million active users in the U.S., the platform enables users to link their bank accounts, credit cards or debit cards to their Venmo account to send and receive money from friends, family or businesses. Once a payment is received, Venmo users have the option to transfer the funds directly to their linked bank account.
The study showed that consumers who prefer connectivity features cited ease, convenience and speed as primary reasons, followed by security. For instance, 30% of consumers stated that the primary reason they choose these tools is prompt payment and instant access to funds.
Furthermore, the availability of connectivity tools, enabling consumers to link their bank accounts directly with merchants or service providers using their bank logins and receive instant funds, significantly influenced their choice of provider.
In fact, the study found that 35% of all consumers, especially 50% of millennials and 51% of bridge millennials, considered the availability of bank connectivity tools as having a very or extremely influential impact on their choice of merchant or provider.
And although only 18% of seniors and baby boomers considered having a connectivity function as important, the study suggested that “these features are likely to become increasingly necessary given younger consumers’ higher-than-average preference for them.”
The fact that Venmo saw 7% growth in the fourth quarter of last year, according to PayPal’s 2023 earnings results released on Wednesday (Feb. 7), reflects this growing demand.