Faster Payments Take Sole Proprietors From Survival to Success

Consumers are struggling under growing economic burdens exacerbated by such problems as inflation rising more than 8% in the past year. As the digital transformation accelerated and those consumers gained experience with faster digital payments, combining that knowledge with the need to handle tighter financial constraints has spurred increased demand for true real-time payments. Consumers want to know that when they pay a bill the day it is due, the funds will arrive on time and they will not face late fees.

Even sole proprietors, many of whom have started a business in recent years in an effort to take greater control over their own financial destinies, face the same tight budgets and sense of living paycheck to paycheck as consumers. While faster payment options are helpful as they reduce the time between making a sale or completing a contract and getting paid from a week to a day, real-time payments add greater certainty and reliability. With true real-time payments, there is no broad range during which the payment is in process or uncertainty whether a payment will arrive on time.

In this month’s Real-Time Payments Tracker®, PYMNTS examines how real-time payments empower individual financial wellness by adding predictability to transactions while ensuring that payments are made reliably and on time without adding financial constraints to the payer.

Around the Real-Time Payments Space

The highest inflation rate in 40 years has consumers paying more for everything from housing to food and other basic necessities, and more and more individuals are worried about being able to pay their bills and make ends meet. The lack of faster payment options has only added to the stress for many consumers, as they struggle to juggle a variety of expenses. While some industries now enable faster payment options, others are woefully behind. Seventy percent of consumers pay their life insurance and health insurance premiums through a direct automated clearing house (ACH) transfer, yet just 31% of consumers make rent payments that way.

While paying insurance premiums may be fairly straightforward for many consumers, medical billing remains fraught with problems. Price transparency is only a concern for 21% of medical providers, yet 87% of surveyed consumers said they were surprised by a medical bill in 2021. Consumers are having no easy time paying those bills either. While 70% of consumers said they were billed by mail, just 9% said they would prefer to pay a medical bill by check. Even when there is an option to go through a website, the payments are not necessarily easy to make, with 25% of consumers saying they abandoned an attempt to pay a medical bill after being unable to pay with a debit or credit card.

For more on these stories and other real-time payments developments, check out the Tracker’s News and Trends section.

Novo on How Faster Payments Take Sole Proprietors From Survival to Success

For some consumers facing a growing cost of living, entrepreneurship offers one path toward economic independence, yet personal finances are just as stressful while getting a business off the ground as living paycheck to paycheck.

In this month’s Feature Story, Grant Sahag, vice president of operations at FinTech Novo, talks about how faster payments relieve stress for sole proprietors and help them take their businesses to a more stable footing sooner.

PYMNTS Intelligence: Seeking Financial Certainty in Uncertain Times

With 64% of consumers living paycheck to paycheck, paying bills on time in the face of rising inflation is becoming increasingly difficult for many households. Even last year, 51% of U.S. adults said they paid a bill late, and economic pressures are only growing. For those making loan payments, such as for a car or mortgage, 15% of consumers in both categories said they regularly make payments late.

This month’s PYMNTS Intelligence takes a look at how real-time payments can help consumers find a sense of certainty and predictability in financially uncertain times. Whether it means receiving pay for gig work when it is needed or making last-minute bill payments without risking late fees, real-time payments can smooth many bumps in consumers’ financial roads.

About the Tracker

The Real-Time Payments Tracker®, a PYMNTS and The Clearing House collaboration, examines the latest trends and developments shaping the real-time payments space and how real-time payments can help to contribute to consumer financial wellness by adding predictability and lowering stress.