Whether it’s instant payments or real-time payments, either way it’s where disbursements seem to be headed, between the demand generated by gig workers and the needs of small businesses that survive or thrive by maintaining healthy cash flow.
Mastercard Senior Vice President, Debit, North America Vickie Van Meir noted that 170 million people received disbursements last year “and 47% of those folks said if it was offered, they would’ve loved for that to have been an instant payment rather than having to wait.”
Given the labor shortage plaguing service industries from retail to restaurants, instant push to debit is a powerful enticement that can help shorthanded businesses attract and retain gig workers who have many options today and will go where wage access is fastest.
“As an employer, if you’re looking for a gig economy employee, if you’re looking for someone in the services industry where tipping is now a use case, I think it’s become a point of differentiation,” she said. “Folks in those verticals who do not offer instant payments are putting themselves at a competitive disadvantage.”
From a small business perspective, instant payments carry a heavier load, as she added that 82% of small and medium-sized businesses (SMBs) fail due to cash management problems. That’s where debit payments can help lighten the load.
See also: Mastercard: Convenience, Choice, Real-Time Data Take Pain From Bill Pay
Security, Velocity and New Use Cases
Use cases are proliferating for real-time payouts as awareness spreads and more companies begin offering payments speed as a benefit of doing business with them.
Van Meir recited a litany of emerging use cases for instant push to debit.
“We’re having different speeds of adoption, but the big ones that I think of are eMarketplaces, for the people who are selling their goods and services through those types of vendors,” she said.
“Then with tipping, certainly you’re hearing about that more and more even in hotels now where you’re able to tip your bellman that way or the person who comes in and does the housekeeping.”
Reliable rails also have a role in the increasing popularity for both sender and receiver as instant funds are irrevocable, bringing security to the fore when moving money this way.
“The benefit of the debit card rail is that it comes with the safety and security,” Van Meir said. “It’s backed by the Mastercard network, in our case. It’s instant. It’s a real-time payment. It’s guaranteed funds. It takes out a lot of the ambiguity. It takes out a lot of the time.”
In sectors like gaming, instant push to debit is a revolutionary development. She said gaming “came out of online, which is great, however, you had to wait sometimes up to 10 days if you cashed out. Now, with push-to-debit payments you can get your cash out via instant payments right away. It becomes a point of differentiation. For those who don’t offer it and you have to wait up to maybe 10 days to get your payout, that’s not as appealing as it is if it’s instant.”
In fact, Van Meir said she sees a push-to-debit opportunity “anywhere you see cash today. It’ll be released for push to card; it’s the next phase of providing consumers with choice in the payments experience. One of the best things that we do at Mastercard is [to] continually innovate. We’re looking across the marketplace and we’re always looking for what’s that next use case where we have customer demand.”
A Cash Management Side Benefit
Payoffs to payouts sent or received via push to debit are turning out to be a lifesaver for SMBs that don’t have the time or expertise for a lot of accounting and pay cycle calculations. Instant push to debit is having a positive impact in this regard.
“Cash management is probably the hardest part of being a small business owner,” she said. “For them to have to spend a lot of their time dealing with those types of things — flow of capital, payroll, supply goods, getting their receivables paid — that could be a full-time job in and of itself.”
Handling payments via push-to-card makes that processes “much more seamless. They take up a great deal less time. That’s probably one of the biggest benefits is it lets a business owner focus on what they want to focus on, what they should focus on, which is their business.”
And for gig workers and SMBs alike, instant push-to-debit acts as its own ledger, tracking payments sent and received and streamlining that component as well.
“It’s a very clear way to track your funds,” she said. “It kind of becomes a cash management system. It’s not necessarily how [gig workers are] going to think about it, but it gives them that security, it gives them that transparency and it gives them that control over their funds and so they can earn it when they want it, and they can spend it when they want it.”
It’s so compelling that she sees instant push to debit “everywhere” within 10 years. “The idea here is to have a digital environment,” she said, for safety, security and speed.
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