“Consumers and microbusinesses receive their payments through a variety of options, but they do not always receive their disbursements through a method to their liking.”
Seriously? Seems impossible. What year is it? Oh, right. It’s that year. COVID-19 year. This calendric fact would be wholly unremarkable, were it not for everything that has transpired, and all that we must merely surmise from the frenetic activity closing out 2020.
In the December 2020 “sizing the choice gap” edition of PYMNTS’ Disbursements Satisfaction Playbook, an Ingo Money collaboration, money movement goes under the microscope for how it’s modifying against a backdrop of unheard-of aid payments and roiling systemic disruptions.
Per the new Playbook, “Consumers and microbusinesses prefer disbursement methods that give them faster access to their funds. Same-day ACH is preferred for nearly 40 percent of payments, for example, yet payments are often sent instead via non-instant digital methods or even paper checks. Same-day ACH is used for only 29.2 percent and 20.3 percent of disbursements that are made to consumers and microbusinesses, respectively.”
Compare that to 19 percent of consumers and nearly 27 percent of microbusinesses receiving disbursements via non-instant methods including credit card accounts, gift cards, PayPal and the like. “A smaller but still significant share of disbursements are still received via paper checks: 18.7 percent among consumers and 29.2 percent among microbusinesses,” the report states.
That’s weird, considering that some think they’re getting instant when they’re not, while others believe it’s unavailable when that’s not true. The December Disbursements Satisfaction Playbook clears up the confusion and points to clear new directions for the industry.
In The Future, Everything’s Instant
Researchers uncovered some revelatory findings for the new Playbook, chief among them the fact that an awareness of “instant” has permeated people’s minds. Ignore it at your bank’s peril.
“Consumers and microbusinesses that understand instant payments’ benefits and utility show a high degree of interest in using them. Our research indicates that 39.9 percent of consumers and 43.2 percent of microbusinesses are ‘very’ or ‘extremely’ likely to choose instant methods for their future disbursements,” according to the new December Disbursements Satisfaction Playbook. “Millennials and bridge millennials lead this trend, with 50.9 percent of the former and 50.8 percent of the latter ‘very’ or ‘extremely’ likely” to pick instant payments in the future.
Payers get it, with PYMNTS finding that 47 percent of them — and 62.5 percent of the biggest — that are not currently offering instant are adding it to their disbursements arsenal for 2021.
Learning Curves And Silver Linings
As with other new financial toys and tools, there’s a learning curve involved for older generations who are decidedly not digital natives and don’t grasp every app intricacy.
December’s Disbursements Satisfaction Playbook notes that “our research shows that 68 percent of Baby Boomers and seniors and 50.4 percent of Gen X consumers are ‘not at all’ or ‘slightly’ familiar with such payments. Only 34 percent of Gen Z consumers and 39.3 percent of millennials say the same, in comparison. This is a trend that is also commonly seen among microbusinesses: 56.3 percent of those that make between $150,000 and $250,000 per year in annual revenue are ‘not at all’ or ‘slightly’ familiar with instant payments.”
That leaves loads of upside growth potential among generational cohorts for whom the speed, convenience and safety of digital disbursements is even more appealing once they feel comfortable with the technology and are confident that it’s as secure as paper checks ever were.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
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