The rise of the on-demand economy has forever changed consumer expectations for how and when they receive funds owed to them by a business, while simultaneously giving businesses new ways to digitally engage with customers. The demand for convenient and speedy payouts has created a unique opportunity to improve operational efficiencies while adding more choices for customers.
Digital payouts are replacing paper-based payments across a range of industries, for everything from insurance claims and utility deposit reimbursements to gig work compensation. According to Fiserv’s research, digital payouts are up to 60 percent less expensive than traditional checks and wires, and digital payouts can drive up to a 25 percent reduction in payment status inquiries. For consumers, the rising adoption of digital payouts is clearly being embraced: 44 percent of U.S. customers are willing to pay for a digital payout, and 70 percent of U.S. consumers prefer them. It’s obvious that digital payouts provide an avenue for companies to improve customer engagement by changing how funds are disbursed.
Simplified payments = Happy customers
Today’s businesses are accustomed to receiving payments from customers digitally, including though an ecommerce site or via a mobile app. The same fundamental technology that enables businesses to receive digital payments can also enable them to deliver digital business-to-consumer payouts. This ability to move funds in and funds out via the same payment rails creates great efficiency for a business and satisfies customers by allowing payouts to be received via their preferred account.
Let’s look at the insurance industry as an example. In the past, when an insurance company distributed funds to a customer, it was typically a long and frustrating process. Most of us have experienced the tedious steps after submitting a claim: sending paperwork, waiting for it to be processed, clarifying information for the agent, settling disputes, and finally receiving payment in the mail weeks down the road. It’s a lengthy journey that can negatively impact a relationship between the customer and the insurance company, especially if the incident has caused undue stress or financial strain.
Digital payouts are now transforming the way that insurers distribute funds to customers, including for Fiserv’s partner State Farm. When a payout is authorized, State Farm can pay customers in a matter of few minutes. More important is that the process allows the customer to control where those funds are sent – to their home, bank account or digital wallet, for example. This helps State Farm reduce operational costs and strengthens the customer relationship.
Increasing consumer choice
When it comes to payouts, people want choices that align with their preferences. To meet this growing demand for choice, businesses can offer multiple options for receiving payouts, including via debit cards, prepaid cards, ACH, digital checks, digital wallets like PayPal, branded payouts through social media platforms like Venmo, or potentially emerging payment options such as crypto.
Whether it’s gaming enthusiasts who want to receive digital payouts after cashing in a big win at an online casino, or rideshare businesses that want to attract new employees by offering payouts after each fare, the key is to provide options to allow recipients to select how and when they want to receive funds. In addition, providing customers with instant liquidity through real-time payments helps them manage finances.
We’ve also recently seen that microlending and neobanking industries are taking advantage of the advances realized with digitizing payouts. While traditionally a conservative sector, the financial industry is making it much easier for customers to transfer funds, pay bills, and receive payments using digital technologies, especially via mobile devices. For younger customers who may not use traditional bank accounts, the ability to receive payouts sent from businesses to non-traditional accounts is a welcome addition.
Improving customer loyalty
The days of companies dictating to customers how payouts are processed are fading. Customers want choices that map to their preferences, and adopting new forms of digital payout technologies is one way that companies can stay ahead of their competitors.
We now live in a world of instant gratification, where news is shared across the globe in a flash, and where retailers like Amazon and Target deliver products to customers in the blink of an eye. If you want to streamline your payout processes, improve the customer experience, and even strengthen your brand, digitizing how you deliver funds to customers is becoming a significant differentiator.