Payments Innovation

Visa, Wave Team To Bring Instant Payouts To Micropreneurs

“When do you want to get paid?” It’s a basic question that — when posed to anyone, particularly, a small business (SMB) — most always has the same answer, no matter who one asks or within what industry: now. Until recently, “now” was almost never an option, since it was always based on when the funds had cleared, regardless of how that payment was made.

Today, now is very much an option, as Bill Sheley, global head of Visa Direct, noted in a conversation with Karen Webster and Wave Chief Financial Services Officer Les Whiting. Sheley remarked that, as the second decade of the 21st century is coming to a close, and “digital-friendly endpoints” have exploded with the possibilities and demand for instant payments, now is not only possible, but game-changing, especially for SMBs.

Changing that game for those micropreneurs is the core of the new Instant Payouts option Visa and Wave announced today (April 18) for small businesses that are a part of Wave’s SMB platform. Now, Wave’s small business customers can access their sales instantly, using Visa Direct rails and their debit cards.

“For us, this is kind of just obvious,” Whiting told Webster. “The reality is there are a lot of things we do to try to help equip small businesses. And the truly smallest business (like freelancers, service providers and microbusiness[es]), and managing cash flow effortlessly, is priority one.”

Time And Cash — Two Things Of Which All Micropreneurs Need More

The first time a micropreneur does their taxes for the year, Whiting told Webster, is enough to send most of them running back to their nine-to-five, and their simple W-2 life. The Wave financial technology platform, he said, at base, is designed to handle the bookkeeping and tax complexities for its micro-merchant customers as they generate invoices and collect funds. Adding payments and, specifically, instant payouts is something Wave has wanted to make part of the platform for the last two years — it is a better, more efficient way to not only manage cash flow, but accelerate how quickly cash can be moved into their bank accounts.

“When we talk to our merchants, they are on the go,” Whiting said. “They submit an invoice from one job, and then they are on to another, and off to take the kids to soccer practice. What will be powerful, particularly as we bring instant payouts to mobile soon, is getting instant notice of an [invoice] being paid and, with one click, [moving] those funds in whole or in part to a bank account. That is a game-changer for the little guy.”

It’s a game-changer that took a while to develop. Whiting said it was a matter of finding the right processing partner in Worldpay, and Visa’s real-time push payments system, to create a solution to even up micropreneurs’ capabilities with that of much larger merchants — and with a brand, he said, that he knew their SMBs would trust.

The Trust Factor And Opening Up For Everyone

If one were to pick a less secure method of sending a payment, Whiting said, they would be hard-pressed to find something worse than writing all their relevant account and personal information on a piece of paper and sticking it in a mailbox. However, he noted, that is literally what writing a check involves. It’s not secure at all, yet it’s what customers know and trust.

The power of the instant pay solution, paired with the Visa rails, is that it allows customers to do something they’ve always done in a different context — and move money through a set of rails they likely already know and trust.

“It really speaks to the power and primacy of card products,” Sheley said, “It creates a lot of peace of mind around what is going to happen with the payment and where [it is] going to go. Getting their debit card out of their wallet is easy, familiar and simple.”

Though the program is starting in limited rollout today, Whiting noted, the goal is to make it an option for every merchant on the Wave platform by the end of 2019. Wave already vets its merchants to make sure they are legitimate users, and that the funds moving to them are good funds. He said that, from Wave’s point of view, the funds are those the firm plans on paying out anyway, so it’s up to Wave to make sure its risk engines are tuned to accelerate when those funds move.

That said, not all merchants will start off with unlimited use of the feature. Those thresholds will be increased the more SMBs use the platform, and the more visibility Wave has into their businesses and payment flows.

Solving for “now,” Whiting and Sheley said, is crucial to helping micropreneurs manage cash flow by giving them a tool to move money into their accounts as they earn it. A widget, Whiting said, will provide that real-time visibility and peace of mind concerning certainty of funds and when they can be accessed. It’s also a major differentiator when it comes to finding and keeping SMBs on the platform.

Getting paid now, as it turns out, is a pretty compelling value proposition, he added.

“I believe there is a day coming [when] people will be able to move money around the world as simply as we move files between computers today,” Whiting said. “That is the reality of what customers want in terms of user experience.”

——————————–

Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The July 2019 Pay Advances: The Gig Economy’s New Normal, a PYMNTS and Mastercard collaboration, examines pay advances – full or partial payments received before an ad hoc job is completed – including how gig workers currently use them and their potential for future adoption.

TRENDING RIGHT NOW

To Top