Ingo and KeyBank: Helping “Smokestack Businesses” Deliver Instant Money

A surefire way of annoying people is making them wait for money. That can lead to ruined friendships, strained family relations and countless arguments and frustrations. Financial institutions (FIs) and the corporate clients they serve are figuring out ways to avoid those dangers when it comes to business, and working with payment service providers to speed up disbursements to consumers.

Ingo Money and KeyBank just announced such a partnership, one designed to provide KeyBank business clients with real-time disbursements and the ability to give end customers choice in how they receive payments. Ingo Money can deliver funds to more than 4.5 billion debit, credit, prepaid and online wallet accounts, along with cash-out locations.

Drew Edwards, Ingo Money CEO, and Matt Miller, head of Product & Innovation of Enterprise Commercial Payments at KeyBank, recently sat for a PYMNTS interview to discuss the need for such a service and what is involved in making it work.

On the higher level, quicker disbursements that consumers can instantly access in accounts of their choosing “[bridge] the smokestack economy and the digital experience,” Edwards said. Giving business clients the ability to pay anyone in an instant and into any account they choose, Miller said, will go a long way in determining the winners in the disbursement space going forward — the FIs that will stand apart from the pack.

Payments And Disbursements Landscape

According to the latest PYMNTS Disbursement Satisfaction Index, consumers are unhappy with paper checks. More than half of respondents (53.7 percent) named direct deposit as their preferred disbursement method for recurring payments, with instant payments coming in as the second most popular method (22.4 percent).

When it comes to disbursements, customers want convenience, certainty and choice, the Index found. Statistics from the Index back up those points. Among the most important factors for consumers receiving disbursements are funds that cannot be stolen (83.6 percent), immediate access to funds (73.7 percent), the security of financial data involved in the disbursement (84.9 percent), and the fact that the payment is fast (75.1 percent).

Speedier Disbursements

The Index also found that 65.1 percent of consumers still receive payments from insurance companies via check, yet only 7.4 percent prefer getting paid by check. That compares to 8.8 percent who prefer getting paid by cash, 53.7 percent who prefer getting paid via direct deposit and 22.4 percent who prefer instant payments.

Consumers of all types are increasingly demanding an instant payments experience that does not require checks, Miller said. That demand was one of the forces behind the launch of Snapsheet Transactions earlier this year, described by the FI as “a multi-channel payment platform for insurance carriers, which will include the Ingo push payment platform.” KeyBank worked with insurance claims services and technology provider Snapsheet on that product.

The idea behind speedy disbursements is not only to push out payments as quickly as possible to consumers, but to enable them to receive those funds via a payment method of their choice. The technology that Ingo brings enables real-time digital disbursements from companies to customers. Ingo said it can reach 4.5 billion customer accounts that include prepaid, debit and credit cards, Amazon and PayPal, and other payment methods.

Ingo’s experience in “serving other large institutions,” and its ability to “settle across all the networks,” played a role in KeyBank choosing that company for its quick disbursement plans, Miller said during the interview. He noted that it would have taken “quite a while” for the financial institution to build its own such service without working with another company, a probable lesson for other banks considering similar programs.

The goal is to reduce the need for corporate clients to send checks or rely on ACH deposits — both of which can be relatively expensive — when sending funds to insurance customers, employees or other types of consumers. Instead, the funds go into customer accounts, where the money is immediately available to recipients.

“A debit card is in everyone’s wallet,” Miller said in describing the appeal of getting those funds to consumers in a speedy fashion.

Reduced Costs

Replacing those manual and paper systems with a digital process reduces operating costs for corporate clients who use the service, and eliminates the “delays and risks that come with check deposit,” Miller said. “It has to be as frictionless as possible.”

There is little doubt of customer demand for quicker disbursements, Miller said. The insurance carriers that KeyBank works with regularly hear from their clients about the frustrations of slow payments — hardly a surprise, given that those funds might be earmarked for vital home or automotive repairs so the head of the household can make it to work on time.

“Those (insurance) clients say, ‘You can take my payment electronically exactly when it’s due, but I need to wait seven to 10 days to receive a check in the mail,'” Miller said.

Offering quick and easy access to payments would seem to have little downside, especially when done in a manner designed to efficiently scale, which saves a bank hassle and enables it to focus on other areas, Edwards said. An instant disbursement product can help an FI with “customer acquisition and existing customer retention,” he noted.

These types of quick disbursements remain in the early stages of development, and are part of the larger B2B trend of moving away from analog processes in favor of digital. It is unlikely that too many consumers are going to complain about having access to more money in shorter periods of time, but the coming months and years should provide more clarity about what works best when it comes to instant payments.