As an incoming White House administration and lawmakers talk imminent stimulus relief, consumers and financial institutions (FIs) are feeling mostly anxiety, between dire economic reality on the one hand and bad memories of the first disbursement fresh in people’s minds.
As Ingo Money CEO Drew Edwards told PYMNTS, “It became glaringly clear to all that the largest payor of funds can do better as these scenarios played out in an unprecedented year — payments can arrive faster and more conveniently to help consumers and businesses pay their bills on time … and it can happen in real time to the account a recipient chooses and authenticates.”
PYMNTS’ December 2020 Disbursements Tracker®, done in collaboration with Ingo Money, notes that “the pressure is on for … government agencies to upgrade their legacy infrastructures to facilitate a modernized, digital disbursements experience. Moving to digital, instant disbursements could have a noted effect on citizens’ financial health by enabling improved security and a potentially greater chance of economic recovery.”
Instant Means Now
As federal and state agencies move to reduce infection hotspots and kickstart commerce — mutually exclusive goals for most of this year — the new Tracker notes that “pressure is on for these government agencies to upgrade their legacy infrastructures to facilitate a modernized, digital disbursements experience. Moving to digital, instant disbursements could have a noted effect on citizens’ financial health by enabling improved security and a potentially greater chance of economic recovery.”
Shredding paper dependency is one way that both government and private industry are moving money faster, but checks aren’t so easily dislodged from the economy writ large.
“Modernizing means to deliver government disbursements in real time and with choice, making all relevant account types and payment methods available in a 24/7 omnichannel experience. [There are] more than 50 million government checks still issued annually, [so] some of the biggest use cases with the largest need for modern payments would likely include IRS tax refunds, VA benefits and FEMA payments, in addition to ad-hoc stimulus relief,” Edwards said.
PYMNTS research found that over 58 percent of consumers received non-government or corporate disbursements by non-instant means. “Payors reported that they only make 45.3 percent of these disbursements via methods that they consider to be non-instant, however, and that the majority of their disbursements are made with faster payment methods.”
Americans Now ‘Less Tolerant’ of Paper Checks
Back in January 2020, more than 37 percent of consumers told PYMNTS they wanted instant disbursements, while just under 25 percent of government agencies offering instant payouts.
That frames the issue with continuing CARES Act disbursements, Small Business Administration emergency loans, stimulus payments to individuals and barriers facing a smooth process.
According to the latest Disbursements Tracker®, “the demand for instant payments that allow consumers to easily receive and spend their money has only grown since the start of the pandemic, as Americans of all age groups adjusted to navigate the negative financial effects of the health crisis. Consumers are becoming less tolerant of checks and other lagging disbursement methods as time goes on, with less than 10 percent noting they would rather receive a check than an instant payment.”
Given these facts, the new Tracker concludes that “implementing some form of instant payment or considering the use cases for mobile or peer-to-peer (P2P) disbursements — especially for those who are unbanked, as these methods often do not require bank accounts — could therefore help government agencies stay on top of vulnerable consumers’ needs.”
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