A developer’s perspective on the essential elements of the XTRM global payments platform that enables payments to anyone, anywhere with a focus on...
Global Mass Payments: Why Choice Matters
New report shows that 76% of mass payments recipients want to choose their method of payment — and many are willing to pay for it (as much as 1%-10%).
For most companies it’s readily apparent that providing customers with their choice of payment methods is good for their business. With the noted exception of self-serve gas stations, whether paying with cash, check, credit or debit card, the transaction for the end-customer is the same and nearly always at the same price.
That choice is part of the convenience factor businesses know their customers expect. The costs associated with processing that transaction may vary widely based on the form of payment — but they’re generally accepted as a cost of doing business borne by the seller.
But when it comes to payment disbursements far less attention has been paid to providing payees with a choice of payment options. For companies making global mass payments to partners and affiliates, employees and contractors, even customer rebates, too little attention has been paid to their users' experience. Too often, the default seems to be to disburse payment using whatever method the payables department deems are the norm.
A new August 2021 report, The Mass Payment, a joint effort from Pymnts.com and Tango Card, may change some of that thinking. The top-line finding from the data gathered in their recent survey, “three quarters of mass payment recipients would pay to have choice in how they receive payments... This underscores an enormous consumer demand for choice in their mass payments experiences — a demand currently unmet.”
So, if payment recipients are willing to pay to have choice, then clearly choice is a desired benefit for a disbursement process. Why, then, is providing these choices so rare in the marketplace? The report doesn’t speculate as to why that demand is currently unmet but it’s this writer’s belief that the demand has been unmet because it has been ignored. Whether payment disbursements are for employee or channel partner incentives, customer referrals or rebates, or even contractor payments for gig workers, program designers understandably focus more on the desired behavior than the reward (aka payment) and more attention to the reward itself rather than the delivery options for global mass payments.
Using a payments platform to offer recipients choice is one way to improve global mass payment disbursements to be more user friendly for end-recipients. According to the report, “thirty-six percent of all consumers say they would prefer to collect mass payments using some type of digital wallet.” Using a digital wallet that can be architected to provide choice at point-of-payment is the key. By disbursing payment to a digital wallet that enables multiple global payment options -- direct deposit, digital prepaid, digital gift card, e-check, wire transfer, paper check, physical prepaid, etc.-- an end-recipient can truly be empowered to take payment in whatever method they deem best for them.
Unfortunately, payee choice is far from the norm. According to the report, only 21% of payees had four or more payment options, while 36% percent of recipients were given no choice at all. Again, no reason was provided as to why the lack of choice persists, leaving one to wonder if the paradigm for considering what payment options to offer was filtered through a cost of disbursement lens rather than through any customer experience consideration. As for the commercial potential, given that the report indicates payees may be willing to pay 1-10% for their choice, perhaps a reconsideration by looking at payment distribution through a revenue growth lens is both warranted and overdue.