Venmo entered the mainstream sphere in 2015. At the time, there was genuine doubt that consumers would adopt a digital payment platform as their primary means of transferring money and making payments. Ten years later, Venmo hosts 92 million active users, and most people keep an average balance of more than $200 in their accounts. Once the public embraced it, digital payments quickly became a standard financial tool.
The next iteration in digital payments adoption is real-time payments. Today, companies have the ability to issue immediate, instant payments to workers—a valuable tool in the gig economy and a necessary one to attract and retain talent. Although about half of U.S. companies are already using a real-time payment network to issue payments, most companies aren’t realizing their full potential. For many gig workers, instant payments remain a myth. But just like the digital payment movement, real-time payments are the future, and companies need to embrace these networks now before they are left behind and suffer a competitive disadvantage. Here are three ways that companies can deliver the promise of instant payments to workers.
Increase Corporate Buy-In
The real-time payment market is already substantial. While the concept of issuing an instant payment to a worker is still new, companies are quickly adopting the technology. ACI Worldwide and Global Data forecasts the market to grow 63% annually through 2027, reaching $511 billion in annual transactions. Despite healthy adoption, more is needed. When more companies implement instant payment technology, the entire business community can reap the benefits. Increased adoption means ubiquitous updates to payroll systems and cash flow management, as well as a more universal customer experience.
Venmo is, again, a good example of the importance of buy-in. Venmo generates revenue as a payment processor for merchants, but the platform wouldn’t be able to process payments without widespread consumer buy-in. Real-time payments will function the same way, when more companies utilize real-time payments, it enhances the experience for everyone.
Companies also benefit from increased adoption. Gig workers and affiliates want instant payments, and they will prioritize the companies that can truly deliver them. Companies that can actually deliver that experience—meaning earned wages of any amount are delivered on-demand, once the worker has completed a job—will see increased retention and worker loyalty.
Why the Right Tech Matters
Instant payments are not always instant. Many workers report delayed payments due to things like minimum earning requirements or data processing errors. When the promise of an instant payment isn’t fulfilled, it can weaken the worker relationship and actually increase payment friction. This is, of course, the opposite of what instant payments should accomplish. Instant payments solve the friction and pain points of traditional payment systems, but the system only works when businesses have opted into the right technology platform to support the payment.
A quality real-time payment network will allow the business to make an immediate payment in any amount, even as low as $0.99, and allow the funds to be automatically available to the worker through a digital card or wallet. In addition, because digital companies operate on a global scale, the platform should have the ability to make cross-border payments in the local currency. Companies should work with a third-party payments provider that can deliver this experience to ensure that workers receive payments instantly upon request. The wrong technology will hinder payment processing and delay worker payments.
Ensure Compliance
The most common roadblock to instant payment adoption is regulation. To issue a payment, companies need to comply with Know Your Business (KYB) and Know Your Customer (KYC) standards. Unfortunately, many companies don’t have the capacity or experience to manage regulatory compliance in-house. The payments processing partner, however, should ensure global compliance on every transaction by running a sanctioned check of every person using the platform as well as full check based on the location or region where the transaction is delivered. Compliance is a significant burden, and many companies delay the adoption of new payment systems because they don’t want to navigate through the regulatory challenges. It is a heavy lift. However, the payments network provider should take on that responsibility to ensure compliance as part of the payment infrastructure.
Adopting real-time payments will certainly be a transition, like any technology revolution—but businesses need to get through the transition. Workers are demanding instant, on-demand payments, and companies must adopt the tools to provide a frictionless payment experience and deliver truly instant payments to remain competitive. It may seem like a significant change, but once you are past the learning curve, your company can reap all of the benefits of real-time payments.
