Whether you’re paying clients, employees, or business partners, finding a way to disburse funds quickly, safely, and efficiently is a constant challenge. Checks are laborious, expensive, and highly susceptible to fraud. Automated clearing house (ACH) payments are safer and usually faster than checks, and the burden of collecting and storing sensitive customer data falls on the business making the payments. And most of the digital options available today are customized to fit specific industry requirements.
Another challenge? Today’s customers are increasingly tech-savvy and turning to real-time, person-to-person (P2P) payment apps to conduct personal business. As a result, most businesses, from insurance companies to members of the gig economy, understand the need to offer convenient, digital business-to-consumer (B2C) payment options to customers and workers alike.
“Digital disbursements give businesses the ability to offer customers a payment option that is as easy as writing a check, but faster and safer,” says Eric Foust, senior director of product management at Early Warning Services, the financial services technology company that launched Zelle®.
Here are 10 ways that companies can consider using digital disbursements to improve their customer and employee experience, save money, and be more efficient.
1. Travel & expense (T&E) reimbursements: Managing travel expenses is a headache for employees and employers alike. Often employees need to pay business-related travel expenses out of their own pockets and then wait for days (or sometimes weeks) to get reimbursed. Digital disbursements could put that money back into the employee’s account in a matter of minutes when both the sender and the recipient are enrolled in the service.
2. Processing refunds: It invariably takes longer to receive a refund on a returned purchase than it took to pay for the item in the first place. Being able to offer customers an immediate refund could be a game-changer in today’s competitive retail market.
3. Insurance: The insurance industry has been an early adopter of digital payments, thanks to the immediate benefits to both the companies and the claimants. Giving adjusters the ability to issue on-site payments means faster recovery time for the customer and less back-office paperwork for the insurer.
4. Rebates: Rebates can be a terrific incentive for shoppers, but buyers don’t want to wait six to eight weeks for their reward. A rebate at the time of purchase would improve the customer experience and help build loyalty to your brand.
5. Tuition reimbursement: As many parents find out the hard way, most colleges want cash upfront for the tuition payment. Once the grants and scholarships come in, those upfront payments are reimbursed. Instead of cutting checks, colleges could save time and money using digital payments.
6. The gig economy: Nearly 80% of U.S. companies employ independent contractors.
7. Restaurant staff: Before most diners switched to paying with plastic, servers could count on leaving work every day with cash in their pockets to help pay living expenses between paychecks. Today many restaurants have moved to weekly payouts of any tips left on credit or debit cards. Implementing an e-payment system can restart the daily process of sending that money back to the employee.
8. Tax refunds: Direct deposit has cut the waiting time for a tax refund dramatically, but that means giving the state or federal government your bank account information. Digital disbursements could speed things up even more without having to hand over personal data.
9. Health-care reimbursements: Most health-care providers require an upfront payment from patients with private health insurance. Once the provider puts the claim through the insurance company and receives payment, they refund any overpayment. That often means cutting a check for a couple of dollars. Since the median cost of issuing a check is estimated at $3,
10. Class action settlements: By the time the dust settles on most class action lawsuits, many recipients end up with a check worth less than the postage on the envelope. It would be cheaper and easier to distribute those proceeds directly into each plaintiff’s bank account.
Forward-thinking financial institutions are integrating direct disbursement options into their existing platforms. “We’ve wrapped our digital payment platform around other services to make these B2C payments easy for our corporate customers,” says J. Christopher Ward, EVP, Head of Product for PNC Treasury Management. "This gives us the ability to differentiate ourselves in the marketplace and establish PNC as a thought leader in disbursements.”
