How Banks Are Turning Payouts Into New Payment Economics

For too long, disbursements have been treated as transactional endpoints — money out, job done. But a growing number of banks are starting to see them differently: not as the end of a process, but the start of a relationship.

At the center of this shift is a powerful new strategy — virtual accounts. More than just a modern payment tool, virtual accounts give banks the ability to rewire how payments create value, turning one-time payouts into always-on financial relationships.

Shifting the focus from virtual accounts as a tactic to virtual accounts as a strategy is important to driving momentum against that shift.

Why? Because virtual accounts allow banks to move beyond simply sending money to a recipient’s existing account at another financial institution or FinTech digital wallet. Instead, they offer the chance to issue a branded digital account to those receivers instantly and at scale. And they can do that where funds are deposited, and this is where the opportunity for new engagement around that account begins.

As stated in the recent PYMNTS Benchmark Report, “The Modern Money Mobility Ecosystem,” to be competitive “accounts must be considered by their issuers as dynamic hubs of financial activity rather than a parking lot for money. To satisfy the account holder’s need for maximum utility and the incentive to open a new account, a modern digital account must offer a wide array of services.”

Among those services, according to the report: multicurrency capabilities, rewards and loyalty programs, and real-time transaction data.

It’s part of the “choice” equation that consumers say they value and want. And it is an option that turns a routine payout of claims, tips, gig wages, gaming winnings, refunds and other ad hoc payments into a chance to establish loyalty, build recurring value, and embed the bank more deeply in the financial lives of the recipients.

For financial institutions, traditional disbursements often generate little future value beyond the corporate account that wants to move the money to a recipient. Thinking about virtual accounts as a strategy flips the economics. Instead of seeing static money, recipients gain faster access to funds, financial management tools, and even rewards. Banks gain new revenue streams, behavioral insights, and lasting customer relationships. For banks under pressure to innovate and differentiate, this strategy offers a powerful competitive edge.

Where It’s Working

Virtual account strategies are already proving their value across industries. Restaurants are sending tips to workers via virtual accounts instead of relying on daily cash or delayed payroll. Gaming platforms are issuing winnings into accounts that players can use to spend or play again. Retailers and insurers are turning refunds and claims into branded financial experiences that keep customers engaged long after the payout.

The magic of virtual accounts is in their ability to close the loop inside of an existing bank ecosystem. Funds don’t just exit the bank. They stay in branded environments where they can be spent, transferred or saved. Banks that provide this capability create a network effect, making it more convenient for users to remain inside their ecosystem than to move elsewhere. That’s not just stickiness. It’s strategy.

And it doesn’t have to be for every disbursement or every receiver for banks to see the value. Imagine the value to a bank if only 1% or 2% of those total payouts became a new customer relationship.

What Banks Need to Deliver

Executing this strategy requires more than repackaging old systems. Banks need agile, modern infrastructure to issue virtual accounts on demand, track and reconcile balances in real time, route payments across rails, and support regulatory compliance and risk management. This kind of full-stack capability isn’t optional, it’s the foundation for turning disbursements into lasting value.

The demand is already here. Consumers overwhelmingly prefer instant payments. Small businesses are willing to pay for faster access to cash. And digital-first competitors are setting new expectations. Virtual accounts meet these needs — while giving banks a new place to compete and win.

Again according to PYMNTS research, back in 2018, only 11% of consumers reported using instant methods most often for disbursements. Fast forward to January 2025, and that figure more than tripled to 41%. Perhaps more impressive is that 90% of consumers said they would prefer to receive money instantly if given the choice.

Virtual accounts as a strategy give banks a path to transform disbursements from cost centers into customer engines. By delivering not just speed but utility, insight and connection, banks can move beyond moving money — and start owning the relationship that comes with it.

How to do that? Check out this graphic of the global Money Mobility ecosystem from PYMNTS to get a sense of the possibilities.