The Future of Business-to-Individual Payments is Digital. Are You Ready?

By Saumil Pandey, Vice President Demand Generation, Onbe

The ways consumers and workforces prefer to pay and get paid are changing, according to findings from the recent Future of Payments Survey from Onbe. These findings have major implications for companies that routinely make disbursements to their customers, freelancers, and other individuals. For example, in the past, consumers may have been content to wait weeks or months for a rebate or credit balance refund check to come in the mail. Today, most want the choice of how to access and use that payment—often through digital channels.

The survey found that over half of consumers believe digital payments are the most secure, and almost three-quarters prefer to make payments using digital methods. In addition, nearly one-third of consumers said they plan to use cash and checks less frequently in the near future. Instead, many are growing increasingly comfortable with noncash payments ranging from physical and virtual cards to mobile wallets, such as Apple Pay, and peer-to-peer (P2P) apps, such as Venmo. Giving consumers the option to be paid via these modalities—and offering them the spend channel flexibility they crave—will be key for businesses looking to diversify their payment strategy.

Why the Shift to Digital?
The COVID-19 pandemic accelerated adoption of digital payments, with consumers turning more frequently to noncash payments over the past two years. Due to the need to practice social distancing, many tried technology such as contactless payments and P2P apps for the first time. The convenience of these newer payment technologies, along with the behaviors they facilitated—such as online grocery ordering and buy online, pick up in-store—appealed to consumers who appreciated having more flexible options. For the same reason, mobile wallets, which have been slower to catch on in the U.S., finally began gaining traction. The U.S. Payments Forum reported 22% YOY growth in digital wallet use in 2021, and the trend is likely to continue. Research from Juniper suggests that digital wallet usage in North America will grow by nearly 50% by 2025.

Generational differences in consumer preferences were also noted in the survey, with younger consumers expressing more interest in using newer payment technology to make or receive payments. For example, 27 percent of adults under age 44 said they expect to use mobile wallets more frequently in 2022, compared to 13 percent of those aged 45 and older. That said, generational differences were not as significant as anticipated. Consumers of all ages say they plan to increase their use of digital payment methods and decrease their use of cash and checks in 2022.

How Can Businesses Meet Changing Payment Preferences?
The Future of Payments Survey identified a growing preference for digital payments both when consumers make payments and when they receive disbursements from businesses—whether it’s a rebate, consumer loyalty reward, refund, or paycheck. On the acquiring side, most businesses already accept digital payments, and some even support emerging payment forms and currencies, including crypto. Retailers have come a long way when it comes to perfecting the checkout experience — in-store, online, or at the point of sale.

But the same is not yet true when companies make disbursements. Checks remain a common payment method, even though many consumers express a preference for alternatives. Businesses can increase recipient satisfaction by offering a mix of payment options, including instant digital choices. They can also improve efficiency and reduce costs by switching to a digital-first disbursement strategy, enabling consumers to access disbursements via a digital portal and select their preferred payment type. While some may still prefer to receive a paper check, others will choose faster, more cost-efficient payment methods, such as virtual cards that can be used immediately.

Businesses can also take advantage of the additional opportunities provided by digital payments to engage their customers and workers. For example, brand communications and special promotions are easy to share at various touch points throughout a digital-first payment experience. And with access to analytics on customer behavior and spend, companies can better understand their recipients and use these insights to inform future initiatives.

Simplifying Your Approach to the Complex Payments Landscape
As more payment choices become widely available, consumer preferences diversify, and businesses see the value of adding more cost-efficient payment options to the mix, the payments landscape is becoming more complex. Preparing for the future of payments means being ready for anything—whether it’s demand for faster disbursements, rapid adoption of mobile wallets, or the growing popularity of cryptocurrency.

Fortunately, businesses have the option to outsource their payment operations to a managed disbursements provider, making it easy to keep up with the evolution of how consumers want to be paid. When it no longer makes sense to orchestrate large-scale disbursement programs in-house, companies should consider partnering with a payments provider that can handle the details and also identify opportunities for cost savings and efficiencies. With a digital-first approach to disbursements, it’s easy to meet the future of payments profitably and efficiently while delivering the best possible recipient experience.

About Saumil Pandey
Saumil is a demand generation leader for over 14 years, she has lent her expertise to B2B and B2C companies across the financial services, retail, healthcare, and technology verticals. At Onbe, she focuses on creating, executing, and managing integrated marketing campaigns to drive demand and generate qualified leads.