Deep Dive: How Instant Payments And Solutions Are Changing Rebates

Retailers have long enticed consumers with rebates, cash back and other rewards. Savvy shoppers have found these traditional programs to be lucrative, but long wait times between purchases made and receiving disbursements have deterred others.

The rapid rise and adoption of instant payments among retailers has solved this issue. Consumers who once had to wait weeks or even months for rebate checks are now seeing payments instantly disbursed into their bank accounts or applied in checkout aisles while shopping.

Online rebates are becoming more popular, too. Rakuten is one of the largest online rebates sites, and though it still disburses rebates through paper checks, its web plugin can alert users about available rebate offers. A simple click applies the discounts, but receiving rebate disbursements could still take a while.

Rakuten issues checks quarterly, and even then only if users’ accounts have accrued more than $5 in redeemable rebates. It is thus no surprise that other rebate and reward platforms such as Ibotta are moving toward instant payments to put cash directly and digitally into customers’ pockets.

Rebate platforms are not alone in recognizing and reacting to the growing demand for instant payments, however. Utility marketplace Energy Federation Inc. has launched a white-label app that Massachusetts service providers can use to offer rebates on energy saving products. The eight companies that took part in the initial program allowed consumers to scan items at Lowe’s stores and receive instant rebates at checkout. They saw a 166 percent increase in participation for energy-efficient goods once the rebate experience was added.

Consumers want real-time payments from merchants

Merchants that offer instant payments appear to be moving ahead of the curve. Doing so is not only cheaper than other methods — each paper check costs up to $3.15, according to a recent National Automated Clearinghouse Association (NACHA) estimate — but also faster. Most importantly, customers increasingly prefer these payout methods.

Business-to-business (B2B) payment service providers are also taking note. Payment gateway platform Cashfree allows eCommerce vendors to instantly refund money to consumers when products are returned, for example.

This added speed has benefits for consumer-facing businesses. A recent MetaBank study found 39 percent of consumers would do business with companies that offered direct rebate deposits disbursed within days, and 47 percent would shop at those that could offer such payments within minutes. Twenty-four percent reported that their preferred way to receive funds from businesses was through digital, peer-to-peer (P2P) options like PayPal, Venmo or Zelle.

Consumers also prefer shopping with merchants that add speed and convenience to their experiences. Data from MetaBank found that 36 percent chose to shop with one merchant over another because it offered added convenience, and 18 percent did so because the retailer gave them quicker access to rebate money.

Customers are even willing to pay fees for the convenience of faster payments, and have been growing increasingly averse to using checks over the last decade. Thirty-one percent said they would be less likely to do business with companies that issued paper checks and would instead prefer quicker deposits, but just 22 percent of companies report plans to utilize real-time payments by next summer.

The trend lines are clear: Consumers want faster, easier access to their money — especially younger, tech-savvy customers. Businesses that do not get on board with these preferences will risk losing consumers over time.