Nandan Sheth, head of Fiserv’s Carat and Digital Commerce business, said the payouts industry was held back for far too long by an inability for businesses to offer consumer choice. This comment comes on the heels of the announcement that Fiserv has just expanded its digital payout options to facilitate branded payments to PayPal and Venmo accounts, giving businesses a way to pay out funds to their customers to those wallets in real time.
“We’re going after categories where there is a lot of inefficiency or a need for speed, and areas where people still use a lot of checks and there’s a need to migrate to digital wallets,” Sheth told Karen Webster in an interview. “It’s about enabling consumer experiences and showing that our merchants can provide a choice for their customers.”
How Would You Like To Be Paid?
The way it works is simple. A receiver, say from an insurance company, will have the option of selecting that the disbursement go to their PayPal or Venmo account. In the case of Venmo, once that payment has been sent, it will show up on that person’s Venmo social graph, displaying the logo of the company that sent it so anyone on their friends list can see it.
Carat is taking care not to give away the amounts that have been sent. The social aspect is intended as a marketing play designed to drive more awareness of the brand.
“So all of the folks on Venmo will be able to see and then maybe call that friend and ask, ‘what is this State Farm thing?’,” Sheth said, giving an example. “Then they can say ‘oh yeah, State Farm allows instant claims payments’ and maybe that will inspire that person to go and look into that brand more.”
For Free Or A Fee
Being able to send a payout in real time will be a big competitive advantage in its own right. An insurance firm, for example, can offer free and real-time payouts as a way of boosting engagement, especially among younger demographics. Alternatively, some companies can choose to offer real-time payouts as a premium service that will drive extra revenue into their coffers via the fees charged.
“It’s up to the merchant if they want to charge a fee or not. They can make a decision to offer payout free to drive acceptance, advertising they support free, real time Venmo payouts,” he said. “Or there might be other use cases where the consumer pays a fee to get an expedited payment.”
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Off The Charts
What’s clear is that real-time payments are very much in demand. While few people had much sense of it in the past, the trend has caught on like wildfire in recent years and nowadays, it’s something everyone wants.
“We’ve been looking at trends for the past five years and the appetite for real time payouts is off the charts,” Sheth said. “It’s just the way we live our lives now. We want groceries delivered today, we want to watch a show right now, we don’t want to wait. And it’s the same with payments.”
See Also: Disbursements Satisfaction Index
Under-banked consumers are another big target. A huge number of people don’t have bank accounts but do have Venmo or PayPal, and Carat is giving them the ability to take deposits in a more organized way.
“It gives those under-banked consumers the ability to reuse those funds to pay other consumers or to shop online,” Sheth said.
Sheth and Webster also spoke about the potential of PayPal and Venmo acting as a kind of “alias” for people who may be somewhat apprehensive about giving out their bank details online.
That extra peace of mind should help out, but either way, Sheth believes instant payments for payouts will take off very fast, especially among millennials and younger demographics. He expects the likes of PayPal and Venmo to capture significant market share in payouts in a very short space of time.
“I think about 50 percent [of payouts] for millennials will be through these next-generation networks such as PayPal and Venmo,” he said. “It’s bold but I think it’s going to be that hot.”