The relationships that consumers have with retailers and service providers are increasingly digital, from how they communicate to how customers pay these businesses. But funds don’t strictly flow in one direction from consumers to businesses. There are times when businesses must issue payouts to their customers for reasons including rebates, refunds, account overpayments, and claims payouts.
The B2C payout process is largely built around issuing paper checks to recipients. But, forward-thinking companies are reevaluating this workflow in light of digital solutions that streamline so many other aspects of their operations—and the global pandemic is only increasing the need for accelerated digitalization. If customers can make payments on their mobile devices, for example, why can’t they receive digital payouts directly to their bank or credit union accounts or debit cards? Do businesses need to continue investing time and money in issuing paper checks when so many transactions are now digital? Isn’t there a better way?
The overall value of digital disbursements as a user-friendly alternative to paper checks for delivering B2C payouts and consumer demand for contactless and speedier payments is driving increased adoption. And research indicates that faster payments are something consumers are willing to pay a premium for. Thirty-three percent (roughly 52 million individuals) of consumers have expressed that they’re willing to pay an additional fee for instant access to payouts.
Here are four things to know about digital disbursements:
- Digital disbursements use existing payment “rails” to deliver faster payouts.
Digital disbursements can replace paper checks by delivering funds through payment rails that consumers already use. For example, one of the most popular alternatives to paper checks is delivering funds via the ACH network. Customers simply provide their account information and their financial institution’s routing number to sign up for ACH disbursements. Other options such as PayPal, Zelle®, and push-to-card (Mastercard SendTM and Visa Direct) are becoming more widely offered and adopted as well.
- Faster payouts can reduce your business’s dependence on paper checks.
How many checks does your business issue to customers on a monthly basis? If it’s a high number, you’re probably spending significant time and money managing the process. Bank of America estimates that the costs of writing a paper check can vary anywhere from $4 to $20, depending on the nature of the business and the transaction. When thinking about the these costs, not only include the physical components of paper checks—the printing, fulfillment, and postage—but also the employee hours spent managing the check issuing process.Digital disbursements can help your business move away from the onerous process of issuing paper checks and replace it with a more efficient digital workflow.
- Customers get their money faster.
When a customer is owed money, they want it in their accounts as soon as possible. This is especially true in circumstances like insurance claims payouts where the need might be urgent. A 2022 Disbursements Satisfaction Report shared that 67% of consumers would be encouraged to keep doing business with senders who offered instant disbursements. As mentioned earlier, customer satisfaction is crucial when thinking about your business’s long term success. With that being said, 58% of claimants with missed expectations noted it was because a payment took longer than they thought it should. Regardless of the situation, faster money means a better customer experience. Digital disbursements can reduce the lag time associated with paper checks and deliver B2C payouts faster than ever before.
- There are experts that can help.
The thought of switching from paper checks to digital disbursements might seem overwhelming in the face of other priorities on your list. This transition can have deep impacts on existing technology, workflows, and security/compliance considerations. But time is of the essence in keeping up with the changing needs, demands, and expectations of your customers. Leveraging solutions developed by established providers that know the ins and outs of disbursement services can get your business up and running quickly, delivering the best possible experience to your customers in the fastest time possible.
The Bottom Line: Digital disbursements are poised to displace paper checks as the go-to for customer payouts. Invest in technology that streamlines the transition for your business while delivering the best possible experience to your customers.
Digital disbursements are but one of many payment conveniences that businesses can offer. Read 3 Reasons Why You Need to Offer Pay by Text—Now.
*This is an update on an original post published April 2021
Today’s legacy and siloed banking technology infrastructure limit financial institutions’ ability to rapidly innovate. It’s time to look at money movement in a new way. Alacriti’s Orbipay Unified Money Movement Services does just that. Whether it’s real-time payments digital disbursements, or bill pay, our cloud-based platform enables banks and credit unions to quickly and seamlessly deliver modern digital payments and money movement experiences. To speak to an Alacriti payments expert, please call us at (908) 791-2916 or email info@alacriti.com.
