Just as consumer preferences and shopping behaviors have diversified in recent decades, so has payment choice. When consumers receive a disbursement such as a refund or incentive from a brand, over 70% of consumers prefer a digital payment method to a traditional check. But that's just the tip of the iceberg. Digital payment modalities range from virtual prepaid cards to bank deposits and instant ACH transfers—and each comes with unique benefits for both payers and payees.
In other words, cutting a check is no longer the one-size-fits-all approach it used to be. While checks still deserve a place in the payments mix, the inherent costliness and inefficiency of paper-based disbursements—and the fact that not everyone has a permanent address or a bank account—mean that brands have good reason to offer a paywall of digital options, too.
For one, the youngest generations prefer fast digital payments. Research from PYMNTS found that while 17% of Gen Z payment recipients and about 16% of millennial recipients report having received an instant digital disbursement in 2020, the same was true for just a single-digit percentage of Baby Boomers. Instant payments are often fee-based, so these findings suggest that younger consumers may be more likely to pay for instant gratification when they're due a payment. Older generations are more likely to prefer other disbursement choices—including those that are free but still relatively fast, such as ACH transfers.
And don't forget that lifestyle can influence payment choice—especially at work. For freelancers and contractors, having payment options as fast and flexible as the employment opportunities they seek helps make life smoother, driving satisfaction and loyalty as a result. In fact, a Mastercard study found that 85% of gig workers in the United States would work more often if they were paid faster, and many are willing to pay a fee to receive their earnings on demand. Unfortunately, for many employers of gig workers and freelancers, weekly or biweekly paydays are still the norm. Exceptions include larger gig employers such as Amazon, which offers Anytime Pay—a feature that lets workers access up to 70% of their earnings instantly—and Uber, which enables instant payments up to five times a day. The good news is that for companies without the resources to develop proprietary solutions, disbursement platforms offer instant payment options, such as virtual cards or push pay, that remove the barriers to flexible bill pay and spend.
Being ready to empower diverse workforces is key in today's global, mobile economy. That means giving employees and contractors the option to remit funds across borders securely and transparently, with affordable FX fees. For example, maritime workers come from around the globe and often need to transfer funds to one or more foreign bank accounts. Offering a fast, simple way to send money back home can be a competitive differentiator for businesses striving to attract and retain talent.
Of course, these examples only scratch the service of the diverse needs and choices that brands should be prepared to accommodate. Fortunately, fulfilling virtually any payment choice is much simpler than it sounds. Brands can use a disbursements platform such as Onbe to offer a paywall of digital and traditional options that meet recipient needs. Often, the brand can select which modalities to offer based on its program goals. For instance, a retailer may opt to pay out consumer rebates via a custom-branded virtual card by default, since this option is the most cost-effective and comes with the opportunity to engage consumers with targeted promotions. Offering additional choices, including a traditional check, ensures that all bases are covered. At the same time, brands can promote more profitable payment options to help shift recipient behavior away from checks.
But at the end of the day, what's most important is being flexible enough to meet your recipients where they are—and give them the payment experience they want. After all, most of us expect to choose how and where we work, shop, and engage with brands, and the same holds true for how we get paid. Brands equipped to offer an array of disbursement options as diverse as their recipients will be best-positioned to deliver positive payment experiences, drive engagement, and ultimately achieve program profitability and success