Debit Push Payments Will Revolutionize Getting Paid, Instantly
Using a debit card to pay a merchant, in a store or online, is standardized and intuitive. But getting paid is neither. Receiving and depositing a check, getting the money “Venmo’d” to you, being paid via ACH (including direct deposits), and of course, receiving cash, are all options. These options require the payee to wait – until they receive the check, wait until the ACH clears or wait until the Venmo payment can be pushed to a bank account. There is an alternative: debit push payments. The “rails” that debit transactions use to make a purchase from a merchant can be used in the reverse direction, that is, the same rails can be used to push a payment to the debit cardholder’s account, pretty much instantly. Visa calls the capability “Visa Direct” and Mastercard calls it “Mastercard Send”. Both work the same; to allow funds to be pushed by a financial institution or a business to a cardholder knowing only the debit card number; no more having to provide the credit union’s routing number and checking or saving account number.
The many possibilities for using this service is what makes the potential so powerful:
- Imagine being in a fender bender, and having the insurance claim disbursement sent directly to your account within minutes.
- Uber drivers who need money to pay for gas can be sent the payout for the day’s rides at the end of each day.
- Wait staff can get their tips paid out at the end of their shift, rather than waiting until the end of the week.
- Airbnb hosts can get their funds for vacation rentals instantly.
- Travelers can accept their voluntary “bump” funds and have the money ready to spend before leaving the airport.
- Lottery winners can get winning payouts instantly.
The dollar amount being sent also doesn’t matter – from hundred thousand dollar real-estate settlements, thousand-dollar healthcare reimbursements for out-of-pocket payments and hundred-dollar government benefits disbursements, down to 50 cent product rebates.
Debit Push payments are not the only method of getting funds transferred in near-real-time. Faster Payments networks hold the promise for real-time settlement between big banks and their clients. Same-Day ACH can also speed up B2B payments. The big differentiator is that debit push payments directly benefit individual cardholders who need the money most: gig economy workers, wait servers, independent contractors, and freelancers.
Debit push payments are already in use. The insurance company Allstate uses it “to facilitate the payment of claims, giving claimants access to their money when they need it most.” Google uses the capability “to enable Google PayTM users to send money in real-time by enabling P2P transfers directly to bank accounts using a debit card.” Zelle relies on the capability to ensure P2P payments are near-real-time.
The actual transfer of funds is faster than the alternatives. Visa requires U.S. issuers “to make funds available to its cardholders within a maximum of 30 minutes of approving the transaction”, while Mastercard states “Posting times depend on the receiving financial institution and routing network.” In either case, having the money in minutes is far better than getting it days later.
What do credit unions need to do? While the majority of debit BINs (the range of numbers associated with all the debit cards issued by a credit union or community bank) are enabled for fast payments, many are not. Credit union members who have a debit card in a BIN not-enabled will not be able to receive their funds near-real-time, but rather will have to wait 2-3 days, negating the benefits of the technology. Usually enabling the BIN is something that is done by the credit union or bank’s debit processor. Verify with your processor that this capability is available, and then start educating your members and customers about this incredible benefit.
To learn more about debit push payments, contact the experts at Trellance at [email protected].
