Ad hoc payments, which are defined as any payment outside of regular invoicing and payroll processes, have long been a strain for enterprise companies to execute for the small- to medium-sized businesses (SMBs) that rely on them. But if your business is interested in cutting the costs of paper checks and delivering a better customer experience, look no further. The rise of real-time payment methods has created an opportunity to streamline and expedite the delivery of ad hoc transactions like never before.
Key findings from “Meeting the Demand for Instant Ad Hoc Payments,” our comprehensive report written in partnership with PYMNTS Intelligence, sheds light on this evolving trend towards instant and disbursement choice for ad hoc payments, exploring the use of instant payments for disbursements to SMBs and consumers across five industry segments: hospitality, gaming, trucking/transportation, gig economy and property management.
Read on to learn some key stats and takeaways from the report and download the full report here.
The Big Picture: Ad Hoc Payments are on the Rise
As the market evolves and the demand for gig/ad hoc work continues to expand across industries, senders report that ad hoc accounts payable (AP) payments represent 35% of their overall ad hoc payment transactions. This represents an overall increase from past years. Speaking to specific industries: gig economy companies (such as DoorDash, Instacart, and Uber) make an above-average share of these payments, at 39%, with gaming companies following closely behind, at 37%.
The takeaway here is clear: keep your eyes peeled for a further increase in demand for instant in the ad hoc payments space.
Instant Payment Offerings Make a Difference to Consumers
Instant is on the rise: according to our survey, payers utilized instant rails for over one-third of payments, marking a significant 28% increase in the last quarter alone. Moreover, the share of senders offering instant payment options has increased, with 32% providing instant payments alongside other options, and 12% exclusively utilizing instant methods.
Instant methods utilized for ad hoc payments vary by firm size. Among all enterprise senders, push-to-card stands out as the most popular method, with 19% of enterprises opting to send ad hoc payments via debit card transactions to bank accounts.
Zelle ranks second, at 8.9%, followed by payment to a bank account via the RTP Network at 4.7%. Larger payers show a preference for real-time payments, indicating a measurable shift in instant payment preferences as sender size increases. But no matter what size the company is, the trend is towards increased offerings of instant payment options across the market, and these increases being met with enthusiasm by consumers.
Cost Concerns Are Diminishing
While costs have historically been a barrier to instant payment adoption amount senders, these concerns appear to be dwindling. Only 9.4% of senders cite cost as their top challenge in ad hoc instant payment adoption, down from 22% in the previous quarter.
Instead, factors like difficulty correcting payment errors, money security concerns, and legacy IT infrastructure have come to pose greater challenges. These factors are likely to become less of a concern as enhanced security features and updated software make their way into the market.
Automation Drives Adoption in Instant
Businesses like making money movement easy. As such, there is a clear correlation between the automation of ad hoc processes and the adoption of instant payment methods, with gaming and gig economy senders, at 73% and 62%, respectively, the most likely to have automated processes for ad hoc payment systems.
As more enterprises automate their ad hoc workflows, reducing the barrier to entry and capitalizing on a lesser need for increased headcount and processes, interest in offering instant payment options is expected to rise.
Ad Hoc Payments Are Growing, Grow with Them
The ad hoc payment landscape is evolving and trending upward, with more enterprise senders embracing instant payments to tackle the issue of delayed paper check payments and strengthen business ties with vendors. This has real market consequence: with that growth it will become more and more apparent that senders who fail to adopt instant payments run the risk of losing business relationships with SMBs. In fact, our report shows that nearly half of them would only do business in future with senders who offer instant payments.
To dive deeper into the insights of the study and explore strategies for meeting the demand for ad hoc payments, download our full report today, or contact an Ingo Payments representative to learn how we can revolutionize your ad hoc payment solution.
