Research Firms Find Instant Digital Payouts Key to Participant Recruitment

Digital disbursements have evolved significantly in recent years, growing from a little-used novelty to a juggernaut competing directly with checks and cash. There are approximately 1.9 billion business-to-consumer (B2C) payments issued each year, with two-thirds of these made via digital means rather than paper checks. Seventy-four percent of households in the U.S. receive some form of disbursement in a given year, making this shift to digital disbursements a massive game changer for the economy as a whole.

Disbursements can take a huge variety of forms, including incentives, payroll, refunds and insurance payouts — in short, essentially any payment that a consumer receives from a company. Just as customers’ preferences have become increasingly digital when making payments, so too have their tastes shifted to digital channels such as virtual cards, automated clearing house (ACH) or direct deposit when receiving them. Electronic payments are now preferred by 68% of consumers for hourly wages, 47% for loan disbursements and 45% for medical reimbursements.

In the December Expanding Payments Choice Playbook®, PYMNTS explores the latest in the world of digital disbursements, including the challenges that companies face in deploying them, what customers expect out of their digital payments, and the new technologies being leveraged to ensure payments are fast and accurate.

Payments Choice Developments From Around the World

The ongoing pandemic is one of many factors prompting a sea change in the world of digital payments. A study found that 49% of consumers have grown more comfortable making digital payments as a result of the pandemic, with many having few options other than embracing digital payments in its early months. Digital disbursements represent the minority of disbursements — nearly 16% of millennials and 17% of Generation Z consumers said in 2020 that they had received instant disbursement payments in the last year — but the growing acceptance of digital payments will likely drive those numbers up in the future.

Consumers are clamoring for payments to be as fast as possible, whether making or receiving them, and many are willing to pay a premium for instant payments. These were among the findings of a PYMNTS study, which also revealed that more Americans received a disbursement over the past two years than in recent memory, thanks to the stimulus payments introduced during the pandemic. The federal government disbursed stimulus payments to 138 million consumers in 2020 and 2021 for a total of 171 million transactions valued at more than $400 billion.

Digital disbursements are gaining adoption quickly. Another study from PYMNTS found that the receipt rate of instant disbursements tripled over the past year and has grown fivefold since 2018, now accounting for 17% of all disbursements. This growth is shared among all disbursement types, including those for investment accounts, income, insurance claims and product purchases. This growth is correlated with customers’ increasing knowledge of instant payments in general, as 37% of consumers now say they are aware of instant payments and what they are, 50% more than the share who said the same in 2020.

For more on these stories and other payments choice developments, read the Playbook’s News and Trends section.

Branded Research on the Importance of Meeting Consumers’ Disbursement Preferences

The global health crisis may have severely impacted everything from how consumers shopped to how they interacted with their banks and workplaces, and it also made many individuals more anxious to quickly receive money. This does not mean all consumers expect to receive funds through the same methods or in the same way, however, making it key for businesses of all industries to keep pace with how consumers’ disbursement preferences are shifting.

In this month’s Feature Story, Kristen Miles, director of Research and Insights for audience technology and survey company Branded Research, discusses why offering a robust array of disbursement options is key to engaging consumers and why businesses must meet the demands of consumers of all generations without adding friction.

Deep Dive: Why Consumers Choose Digital Disbursements and How Businesses Can Meet Demand

Digital disbursements have grown popular in recent years, fueled by new instant payments technology and consumers’ growing demand for convenience. Businesses face numerous challenges in meeting consumers’ disbursement expectations, however.

This month’s Deep Dive discusses why consumers desire digital disbursements and explains why companies are often unaware of disbursement solutions that can provide superior payment capabilities to those of paper checks.

About the Playbook

The Expanding Payments Choice Playbook®, done in collaboration with Onbe, is your go-to monthly resource for updates on trends and changes in digital disbursements.