The Instant Payments Digital Divide: Why Some Small Businesses Thrive and Others Struggle

A looming Sept. 30 deadline set by an executive order to digitize federal government disbursements, a move affecting $175 billion worth of payments last year, presents a formidable, yet critical, challenge for federal agencies. The mandate, issued by President Donald Trump, aims to usher in a new era of public sector payments, moving away from cumbersome paper checks to digital rails such as direct deposit, debit and credit card payments, and digital wallets, with the ultimate goal of paving the way for real-time transfers. Ingo Payments President and Chief Operating Officer Rusty Pickering told PYMNTS that the federal agencies “need to modernize their payment systems … and the timeline is pretty tight.” Even large, agile private sector entities like insurance companies often require a year or more for such implementations, he said. The federal government faces a unique set of challenges, starting with a fundamental data gap, as many recipients currently receiving checks may only have a name and a physical mailing address on file. While the government has made strides in enabling direct deposit through the ACH system, successfully transitioning many recipients, a substantial “long tail” remains, Pickering said. This segment comprises individuals who have not yet engaged with the government to enable ACH, often due to a variety of reasons. These include a lack of digital contact information, not possessing a traditional bank account with an ACH routing number, or having a prepaid account where the routing number is not easily accessible. For some, a bank account simply doesn’t exist at all. The Imperative of Payment Choice The reliance on ACH as the primary digital payment channel for government disbursements falls short of meeting the diverse needs of the population. “To reach everybody, you need to meet them where they are,” Pickering said. This means enabling instant payment methods beyond ACH, which primarily caters to traditional checking accounts. Visa and Mastercard, for instance, have long enabled instant payments to debit cards, requiring only the card number, expiration date, CVV and name. Other instant payment avenues, such as PayPal, also exist but are not yet enabled at the federal government level. Consumer preferences underscore the need for choice. Data from Ingo Payments revealed that over 80% of consumers choose debit cards when presented with a menu of payment options, largely because debit cards are ubiquitous and consumers are accustomed to using them online. Pickering pointed out that many consumers, particularly millennials, are unfamiliar with checkbooks or even what an ACH routing number is. “Ask a millennial where their checkbook is to find their routing number — they’re going to look at you quizzically because they don’t even know what a checkbook is,” Pickering said. PayPal ranks as the next most popular choice, followed by ACH. Interestingly, a small segment, like Pickering’s own mother, still prefers checks, highlighting the need for a comprehensive approach that prioritizes digital disbursements while acknowledging existing preferences. For those who lack any form of bank or prepaid account, the government will need the capability to issue new accounts, such as virtual or physical prepaid cards. This comprehensive approach — integrating new payment rails, building associated security systems, verifying recipients and accounts, implementing fraud mechanisms, and establishing dispute resolution and customer service capabilities — is an “enormous amount of work,” but ultimately “enables everybody to be paid the way that they want to be paid,” Pickering said. Forging Partnerships for Broader Reach and Connectivity Connecting to these diverse payment rails is not merely a technical integration; it requires a complex ecosystem of support systems. Each rail demands specific connectivity, account validation and verification procedures, along with tailored customer service to handle disputes and issues. However, companies like Ingo Payments have already navigated these complexities and offer “a full package of services” that enable these capabilities. Ingo, for instance, is already connected to networks like Visa and Mastercard, as well as PayPal and the ACH rails. It also retains the capability to issue a check if a recipient is insistent, although the goal is to shift away from this option. Revolutionizing Operational Costs and Efficiency Beyond consumer preference and reach, the shift to digital disbursements promises operational and cost efficiencies. The government spends an estimated $700 million annually on the paper-based record-keeping and processing associated with checks. “The cost of producing and mailing checks can cost between $6 and $15,” Pickering said. But the true cost of issuing a paper check extends beyond printing and mailing, encompassing a myriad of logistical issues such as checks being lost in transit, forgotten in drawers or stolen. While the cost of mailing a check can vary, a digital payment can be executed for a “fraction of that cost,” leading to potential savings of 90% or more, he said. Perhaps one of the most compelling arguments for digitizing government disbursements is the reduction in fraud vulnerability. Paper checks are inherently susceptible to numerous “attack vectors,” Pickering said. Once a check is mailed, control is lost, making it vulnerable to mail fraud, where checks are stolen, “washed” with chemicals like acetone to alter payee names, or counterfeited entirely. Digital payments make it “a lot easier to put in place fraud prevention on digital payments on the front end,” Pickering said, adding that “we have a lot of experience with check fraud. We have one of the only instant disbursement capabilities tied to a check. So, we know more than most about check fraud.” Furthermore, digital payments create a robust “digital trail” that logs and tracks all transactions. This trail simplifies dispute resolution, making it harder for someone to falsely claim they didn’t receive a payment if they logged in, provided proper credentials, and their device and contact information match. The experience of Ingo Payments suggests that fraud in digital disbursements is “fairly low,” as most payment fraud occurs when money is being pulled out of an account rather than disbursed, Pickering said. But with device analysis — checking if the device is spoofed, examining its currency, time zone, manufacturer, data source and geolocation — and third-party data sources, the fraud rates can be cut down even more. Payments choice will give rise to financial inclusion, Pickering said. “We [at Ingo] have been in the business of allowing the underbanked and underserved to digitize their checks and load them into their accounts,” or in other cases, can issue a prepaid card after verifying their details digitally, he said. “The full solution in our view is to give the consumer choice,” Pickering said. “That’s the critical thing — to interact with them digitally and give them a menu of choices.”

by Lisa McFarland Embedded finance used to feel like a novelty — an extra button you bolted onto checkout. Six months into 2025, it’s closer to table stakes. When every brand from coffee chains to construction suppliers can tuck payments, lending, or insurance into their own flow, the question isn’t whether money will move in the background, but how safely and predictably it moves once it’s there. That’s the lens my team and I bring to our mid-season review. Before we call the next play, I’m checking three gauges on the product console. They’re simple on the surface, but they underpin everything we — and our partners — will do in the back half of the year. 1. Risk Travels With the Money Instant rails are only useful if risk decisions keep pace. We’ve moved underwriting into the ledger entry itself, letting each credit, debit or payout clear with a built-in “should we trust this?” moment. That change matters to any brand embedding finance: you get a realtime experience without a next-day reconciliation hangover, and your customer service team isn’t left explaining mysterious holds. 2. One Token, Many Routes A core promise of embedded finance is hiding infrastructure sprawl from the end user. Our Pay API now treats cards, ACH, wallets, real-time payments— and yes, even checks — as interchangeable routes tied to a single token. Treasury teams see one liquidity picture, engineers see one integration and customers simply see funds arrive. The rails themselves become a detail, not a decision point. 3. Core In-House, Edge In Partnership Owning the heavy machinery of the stack keeps us nimble; selective alliances give us sharper signals without slowing that pace. Device intelligence from Sardine, issuing muscle from Marqeta, identity data from Socure — each slots into the foundation rather than dictating it. For partners plugging us into their own products, that balance translates to speed and depth: a reliable core that can still adopt the latest specialist capability. HOW THE PIECES FIT TOGETHER Move-with-the-money risk, multi-rail tokens and “build-core/borrow-edge” partnerships aren’t separate bullet points on a roadmap that teams will have to debate which to choose from; they reinforce one another. The ledger-level risk check feeds richer data back to our partners, which in turn improves route selection. A unified token makes it trivial to test a new payment rail or fraud model without rewriting code. And a tight core means we can add — or swap — specialist providers quickly when the market shifts. The loop keeps tightening, and every turn raises the bar for what “embedded” really means. WHERE WE’RE HEADED AFTER THE WHISTLE In the second half, expect liquidity to become programmable — routes will change on the fly based on cost, context and customer preference. AI models, finally looking at a full picture instead of fragmented snapshots, will fade false positives into the background. And M&A consolidation will reward platforms that pair end-to-end governance with a modular interface. Our job is to make that future feel ordinary: money that moves, settles and reconciles so smoothly that product teams can focus on delight, not downtime. If we do it right, embedded finance stops being a buzzword and starts feeling like reliable infrastructure — power and plumbing for the digital economy. Halftime is over. See you in Q3.

The trucking and transportation industry depends on timing. When parts, fuel or payments don’t arrive on time, everything downstream suffers. In recent years, instant payments have helped address part of this challenge, enabling fast and secure vendor disbursements. However, while fuel providers now receive urgent payouts, drivers often don’t — and that imbalance is becoming harder to ignore. PYMNTS Intelligence finds that 97% of logistics companies say they must complete fuel payments in a timely manner, yet less than half apply the same urgency to driver pay. This gap reflects a lingering mindset that drivers will wait. In actuality, 93% of truckers say they would opt for instant disbursements if offered, and many say it’s a key factor in choosing where to work. Instant payments are already on the rise in the vendor landscape. Nearly 48% of transportation firms use them for ad hoc vendor payouts, with many willing to pay fees for the speed. Among businesses with frequent urgent payment needs, full-fee instant payments occur twice as often compared to those with fewer urgency demands. Drivers are also willing to pay for speed. Roughly 37% say they would be very or extremely willing to pay a fee for instant earnings, citing access to fuel money, fewer banking delays and peace of mind. That level of preference — stronger than the general population — suggests the industry is overdue for a shift. To meet the moment, companies must modernize internal systems, simplify payment flows and embed instant payout options wherever possible. Real-time rails such as the RTP® network and the FedNow® Service offer the infrastructure to make this happen. Truckers don’t just want to get paid faster — they need it. Companies that deliver will gain efficiency and loyalty in an industry where both are in short supply.