When it comes to getting paid, the sooner people get their money, the better. Businesses distribute payments to customers for a variety of reasons. In some cases, a company might issue a rebate to a customer for a product they purchased. An insurance provider might reimburse a claimant for repairs or medical treatment. With the rise of the gig economy, companies also need to pay people for their work as nonemployees.
In the past, companies often relied on paper checks to issue payments to customers and nonemployees. Fortunately, digital disbursements are now available that streamline the payment process, letting people get their money sooner. If your company regularly issues payments to consumers, learn more about the benefits of instant digital payments and how to make them work for you.
What Are B2C Disbursements?
Business to consumer (B2C) disbursements are payments made by a business to a customer or individual. In 2017, businesses made 611.3 million disbursement transactions via check, which can lead to delays from when a consumer issues a request for payment and the time they actually receive compensation or reimbursement.
Instant disbursements put money in a consumer’s hands or bank account right away. When a company issues an instant payment, they typically use a virtual card or payment method. The consumer doesn’t have to wait for the company to process a paper check or for the check to arrive in the mail. Instead, they get the money on a prepaid virtual card or in an account. From there, they can transfer the funds to their bank account or use a prepaid card to withdraw cash at an ATM.
Consumers who receive disbursements often don’t need to have a checking or savings account to access the funds from the company. They also don’t need to visit a check-cashing store. Examples of instant payments or disbursements include:
- Same-day automated clearinghouse (ACH): Same-day ACH payments are examples of direct deposits that let people get their money the same day the company sends the payment. Typically, direct deposits take a few days to arrive in a person’s account. To use ACH, a consumer needs to have a bank account.
- Push-to-card: A push-to-card payment sends money to a digital wallet or prepaid card over card payment networks.
- Alias-based: An alias-based payment method sends money over Zelle or PayPal. The person receiving the money has an “alias” with the payment provider, such as their email address or mobile phone number. Once the money is in the alias-based account, they can transfer it to a bank account or use a prepaid card to withdraw cash at an ATM.
How Customers Benefit From Digital Disbursements
Consumers can benefit from digital disbursements in a few ways. One of the most notable benefits is how consumers are paid when a company sends a digital payment. They don’t have to wait for the company to print and mail a check. Once the payment lands in their account, they are free to do what they want, whether they choose to transfer it to their savings or checking account or withdraw it in cash.
Digital disbursements are also much more convenient for consumers compared to paper-based payment methods. When someone receives a paper check, there’s an additional step involved before they can actually get the money. Depending on their situation, they might need to make a trip to a brick-and-mortar bank or a check-cashing facility. Even if they have a mobile banking app that accepts digital deposits, they’ll have to go through the process of taking a picture of the check and inputting information about it into the app.
When a person gets an instant payment, they can get access to their money with a few quick taps or a few mouse clicks. They can manage their payments all from the comfort of their home.
Instant payments can also be more cost-effective for consumers. If they don’t have a bank account, visiting a check-cashing facility every time they get paid via check can add up, as many places charge a fee based on the value of the check. Depositing checks at a bank can also cost money in the form of wear-and-tear on the person’s vehicle, fuel costs, and time taken out of their day to wait in line for a teller.
How Businesses Benefit From Instant Disbursements
Consumers aren’t the only ones who benefit when companies issue payments instantly. The businesses that use instant disbursement programs also benefit. Some of the business advantages of offering instant digital payments include:
- Increased customer loyalty and engagement: Consumers may be more likely to continue doing business with companies that reimburse or pay them right away. For example, an insured individual is likely to prefer working with an insurance company that sends reimbursement payments immediately. A freelancer is likely to do more work with a company that pays quickly rather than one that takes weeks or months to pay for services.
- Reduced operating costs: Instant disbursements cost companies less than paper-based payments. Even if your company pays the processing and transaction fees some card merchants charge, the overall cost to you is likely to be less than the cost of purchasing checks and mailing them to individuals.
- Increased revenue opportunities: The more demand for your company’s services or products, the more opportunities there are for your business to earn revenue. By streamlining your payment process, you might also give employees time to develop new ideas for additional revenue streams.
- Improved response to customer demand: If your customers have been asking for different disbursement options or other ways to receive reimbursements besides paper checks, introducing instant disbursements allows you to respond to their requests.
How Hydrogen Can Facilitate B2C Disbursement Payments
Whether you want to issue instant payments to freelancers, reimburse clients quickly, or offer consumers immediate rebates and rewards, Hydrogen can help. You can use our platform to create and issue virtual cards. When you need to pay a customer or freelance worker, you load the value of the payment on the virtual card. The consumer can then transfer the funds from the virtual card to their bank account.
Our easy-to-use, no-code platform lets you set up virtual payments in minutes so you can take advantage of the many benefits of virtual cards.
Disbursement Payment Solutions From Hydrogen
Make paper-based payments a thing of the past for your company. By issuing immediate payments, you’re more likely to win customers and convince current clients and contractors to continue working with you. If you’d like to learn more about how your company can make B2C disbursements quickly and easily, request access to our platform today.