92% of Enterprises Expect Instant Payments to Dominate Ad Hoc Payments

With government disbursements very much in the news these days, a recent report from PYMNTS and Ingo Payments is starting to look prescient. The October study, “How Instant Pay Is Becoming the Standard for Ad Hoc Payments,” reveals a significant and accelerating shift toward instant payment methods for enterprises disbursing ad hoc funds to consumers and small to medium-sized businesses (SMBs). The study, based on a survey of 200 enterprise senders across industries like transportation, hospitality, gaming and the gig economy, highlights that what was once a niche offering is rapidly becoming the expected norm. This presents both opportunities and challenges for financial institutions as they navigate the increasing demand for immediate fund availability.

The report underscores the growing volume and value of ad hoc payments, which now constitute an average of 36% of an enterprise’s accounts payable (AP) volume in dollars, a substantial increase from 29% in the first quarter of 2024. Fueling this trend is the increasing adoption of instant payment methods, which accounted for 45% of all ad hoc payments as of July 2024, up from just 36% in January of the same year, making it the most common method for these transactions. Notably, 92% of senders anticipate that instant payments will eventually become the standard procedure for ad hoc payments, with a significant portion believing this will occur within the next one to five years.

Three key data points illustrate this transformation:

Surging instant usage: The share of ad hoc payments sent via instant methods jumped to 45% in July 2024, marking a significant 9 percentage point increase in just six months. This growth is particularly pronounced in the gig economy and gaming sectors, where instant usage has soared to 64% and 49% of transactions, respectively.

Business preference for push-to-debit: When sending instant ad hoc payments to businesses, 50% of these transactions are made via push to debit card. This preference is driven by the perceived security and familiarity associated with this method, with 64% of senders citing security and fraud protection as key reasons.

Consumer inclination toward digital wallets: In contrast, digital wallets have become the most common method for enterprise senders paying consumers instantly. More than half of all instant ad hoc payments from gig economy firms, for example, are sent via PayPal and Venmo, suggesting convenience is a major factor for both senders and receivers in these transactions.

Beyond these core findings, the report reveals several other intriguing trends. While 84% of senders have used instant payments for at least one type of ad hoc payment, the availability often depends on the situation, with only 39% always offering instant options. Vendor and customer retention are the top reasons senders offer instant payments, and they are also the primary drivers for senders covering the cost of these transactions.

However, the cost of integrating instant payment capabilities remains a significant barrier for some enterprises, leading 38% of senders to already utilize third-party solutions, with another 55% planning to increase such integrations to offer multiple instant payment options in the coming years. These dynamics highlight the critical role that technology providers and financial institutions will play in facilitating the continued adoption of instant payments in the evolving landscape of ad hoc disbursements.