The disbursements market is growing and changing rapidly
In just three years between 2014 and 2017, the total dollar volume of disbursements rose 48%3, and now amounts to an estimated $12.5 trillion annually in North America.
Introduction
The growing expectation to have immediate access to money is changing the way consumers, merchants, corporations, financial institutions, and governments send and receive payments. In 2018, Visa commissioned research with Aite Group to understand the disbursement payment preferences of consumer and business recipients in North America. The research also explored corporate payer sentiment towards offering real-time² payments and choices on improving the customer experience and on providing a frictionless, digital experience that meets fast-changing consumer preferences and rising global payments challenges.
North America funds disbursements insights
Real-time payments will drive the next wave of digital payments growth
With the growth of on-demand services, an estimated 74% of North American households with consumers between the ages of 18 and 65 received some type of funds disbursement in 2017.4
On-demand services and new e-commerce platforms with sellers, hosts, drivers, freelancers and developers need to offer faster access to funds with greater convenience and security to compete effectively.
Insurance companies are also looking for faster ways to disburse emergency funds and send claims payments to their customers.5
Companies can transform their customer experience with real-time payments
27 out of 30 industry payments executives interviewed cited improving customer experience as the most important reason to offer real-time payments.6
In 2017, 56% of disbursements took between 2 days to 14 days for recipients to receive their funds.4 This creates an opportunity to innovate with new push-to-card payment solutions.
New real-time payments product solutions can attract and retain business customers
80% of surveyed small businesses indicated improving cash-flow as the top reason to adopt real-time payments for business disbursements.4
96% of surveyed merchants reported they would opt in to real-time payments from their acquiring bank and 85% would switch to another service provider to obtain real-time payments.7
Cross-border markets are opening up, creating opportunity for payers
The surveyed North American merchants generated 19% of their sales cross-border and in North America consumers reported receiving 5% of funds disbursements from a corporate payer across domestic borders.8 As the world continues to globalize, cross-border disbursements will become more significant, leading consumers and merchants to demand real-time payments. Real-time cross-border funds disbursements could represent an additional market and point of differentiation for payers.
Visa Direct enables both domestic and cross border real-time funds transfers and is capable of reaching more than a billion cards globally and over 16,000 financial institutions.9
Methodology and sources
Aite research for ‘North America insights on real-time payments’ commissioned by Visa
- Corporate Payers: Qualitative survey of 30 executives at major companies in the U.S. and Canada making B2C disbursements. Verticals included Insurance, Healthcare, Contract Staffing, Marketplaces, On Demand Services, and Alternative Lending.
- Consumer recipients: Quantitative online study of 2,379 U.S. and Canadian consumers aged 18-65 who received funds disbursements in the last 12 months.
- Business recipients: Quantitative online survey of 154 SMB merchants in the U.S. and Canada with annual revenues between US $100K and US $10M.
Sources
- 1Visa and Accenture analysis of existing/syndicated research and public data, September 2017.
- 2Actual fund availability varies by financial institution and region. Visa requires U.S. issuers to make funds available to its cardholders within a maximum of 30 minutes of approving the transaction. Please refer to your Visa representative and the Visa Direct Original Credit Transaction Global Implementation Guide for more information.
- 3Aite Group 'North America insights on real-time payments' commissioned by Visa June June 2018. Based on Aite Group survey of 1,663 U.S. consumers in Q2 2015, and a survey of 2,379 North American consumers in Q4 2017.
- 4Aite Group 'North America insights on real-time payments' commissioned by Visa June 2018. Based on Aite Group survey of 2,379 North American consumers in Q4 2017.
- 5AFP, Inc article ‘Treasurers Are Increasingly Interested In Faster Payments’ (November 17, 2016) https://www.afponline.org/trends-topics/topics/articles/Details/treasurers-are-increasingly-interested-in-faster-payments/
- 6Aite Group 'North America insights on real-time payments' commissioned by Visa June 2018. Based on Aite Group Funds Disbursements Research archives, Industry Executive Interviews, Q4 2017 (n=30).
- 7Aite 'North America insights on real-time payments' commissioned by Visa June 2018. Based on Aite Group survey of 154 North American merchants in Q4 2017.
- 8Aite 'North America insights on real-time payments' commissioned by Visa June 2018. Based on Aite Group interviews with 30 North American executives in Q4 2017, Aite Group and Visa Inc. survey of 2,379 North American consumers in Q4 2017, and Aite Group and Visa Inc. survey of 154 North American merchants in Q4 2017.
- 9Visa Direct OCT coverage statistics (January 2018).