Will Disbursements Put Payday Cycles Out To Pasture?

The rise of fast-acting payment solutions is changing the way businesses and governments issue payments to consumers and citizens. Demand for instant payments is also increasing in the workforce, and has the potential to change how workers view concepts like payday.

The new Disbursements Tracker highlights recent efforts by businesses, banks and government agencies to improve payment practices by delivering on consumers’ speedy expectations, and how the rise of peer-to-peer (P2P) services like Venmo and Zelle are raising the disbursements bar.

Around the World of Disbursements

Several government agencies are stepping up their efforts to improve the way payments are issued to the most vulnerable citizens.

Australia’s Department of Human Services has used the nation’s New Payments Platform (NPP) to deliver roughly $2.2 million AUD ($1.56 million USD) in disaster relief funds to the city of Townsville, which has been recovering from heavy floods. Across the globe, Ireland’s Department of Social Protection recently partnered with Visa to deposit welfare benefits into recipients’ bank accounts.

In addition to partnering with government agencies, Visa also formed a partnership with PayActiv. Under the terms of the deal, PayActiv can use Visa Direct’s real-time push payment capabilities to deliver gig workers’ earnings to debit cards or reloadable prepaid cards. The solution could spare gig workers from waiting on a weekly or biweekly pay cycle for their earnings.

PayPal recently launched its own disbursement solution, Instant Transfer. The new solution enables PayPal businesses and consumers to instantly transfer funds from their bank accounts, instead of waiting a day for funds to arrive. The company said it plans to make the feature available on its P2P service Venmo in the near future.

Deep Dive: Where Disbursements Fall Short of Expectations

Part of the appeal of P2P services like Venmo and the bank-operated Zelle network is that these solutions offer users near-instant access to money. However, this enhanced payment speed could be sowing dissatisfaction among the roughly two-thirds of Americans who live paycheck to paycheck.

This month’s Deep Dive showcases how fast-acting P2P services are changing expectations for disbursements.

With On-Demand Wages, Payday Comes Every Day

One potential disbursement solution that could address worker dissatisfaction is the ability to access wages instantly, when they want. With these solutions available, workers can request their earned wages earlier than the regular pay schedule allows, giving them the capital they need to pay for an unexpected expense and avoid a financial pitfall.

For the April feature story, Mark Wes, head of risk, payments and compliance for payroll solutions provider Gusto, explained how the company’s Flexible Pay solution is challenging long-held perceptions about payday, while helping employers retain top talent.

About the Disbursements Tracker

The PYMNTS Disbursements Tracker, powered by Ingo Money, is the go-to monthly resource for staying up to date on the trends and changes in the digital disbursement space.