Payments Innovation

Legal Disbursements And The Paper Chase

Legal Disbursements And The Paper Chase

The third decade of the 21st century is dawning with self-driving cars, the ability to rent almost anything and, best of all, instant money. But many financial institutions (FIs) are paying certain parties like it’s 1999.

That’s one big takeaway from the December 2019 PYMNTS Disbursements Tracker, which notes the widening gap between instant money and the old world of paper-based payments. The effect is perhaps most pronounced in the legal profession, where payments have been done a certain way for time immemorial, and where there are also serious matters of compliance.

‘I Want it Now’

Flocks of FinTechs are getting involved in moving money faster – and storing it, too. The introduction of Uber Money addressed what the company sees as a disparity between those who can afford to live between two-week pay cycles and those who can’t. Along these same lines, JPMorgan Chase introduced a digital wallet to enable sharing economy firms to pay their workers with more speed and efficiency. And while the incentives are there, uptake has been lethargic.

Another bold “instant” moves is the Chinese Internet giant Tencent fielding WeChat Pay, a P2P extension of its massively popular social media app. The money transfer feature is flexible and easy, which explains why its users completed over $1 billion USD of in-app transactions in 2018. That figure pales in comparison to the $49 billion that passed through the Zelle P2P app in just Q3 2019 in nearly 200 million separate transactions.

Taken together, these developments paint a vivid portrait of growth.

Paper checks continue at this point, due to a range of reasons like inertia (“we’re already set up to cut and mail checks”) to fear of the unknown (“instant for whom?”). But PYMNTS research concurs with a number of other surveys on this point: Roughly 90 percent of consumers say they would choose instant disbursements over paper checks if offered the option.

Law & Order IPU (Instant Payments Unquestionably)

Law firms face more daunting hurdles than some when adopting instant disbursements. To begin with, it’s not an industry known for change or transparency. But stringent rules also govern when law firms must pay settlements and judgments, and there are damaging fines for payment timing errors. So the caution is understandable, but there’s a growing consensus that the law, like the rest of the commercial world, must also find a way to instant.

Checks occupy a larger role in the land of legal settlements due to their incontrovertible physical nature. In other words, you can hold a check in your hand, inspect the stamps and signatures, check visually for tampering and more. It’s tangible, not digital. But legal disbursements are also a regulated two-step process with a lawyer at the center, which is some people’s exact definition of “friction.”

This is changing, slowly, as mobile apps like DoNotPay come on the scene, first to simplify a single thing (in this case, it was class-action lawsuits). But the app’s functionality is expanding, opening up some eyes to potential improvements for legal disbursements in the era of instant.



B2B APIs aren’t just for large enterprises anymore — middle-market firms and SMBs now realize their potential for enabling low-cost access to real-time payments and account data. But those capabilities are only the tip of the API iceberg, says HSBC global head of liquidity and cash management Diane Reyes. In this month’s B2B API Tracker, Reyes explains how the next wave of banking APIs could fight payments fraud and proactively alert middle-market treasurers to investment opportunities.