The advent of push payments is fast upending paper-based payments by accelerating the digitization of funds and effectively killing the check.

The availability of push payments technology today has leapfrogged those in the financial services sector waiting for new technologies and systems to deliver fast funds tomorrow. Push payments are instant, guaranteed, protected, and, best of all, trusted and comfortable for the consumer.

This capability creates both an outsized opportunity and a tremendous risk for banks, businesses, and many traditional payment instrument providers.

Visa's one of the early movers in push payments via Visa Direct, which gives consumers more choice in digital payments.
Bloomberg News

As insurance companies, payroll issuers and other legacy paper check payers seek to capitalize on the cost savings of and consumer preference for push payments, they must move quickly to offer push payment functionality or risk being left behind by customers.

Similarly, payment providers have an opening to become the preferred account destination within a consumer wallet, but those that do not move aggressively risk being relegated to the wallet periphery behind other bank, debit card and online accounts.

A number of individual network solutions like Visa Direct support a push versus a pull of funds so that money can instantly be funded back to a card or account. By joining these one-off networks together, it’s possible to build a ubiquitous push payments solution that delivers complete consumer choice.

These payments operate on existing card network rails and rely on the same sponsor bank and acquirer system as merchant transactions. In this way, the process is familiar to consumers since they simply swipe or share their card numbers. No need to memorize bank account numbers or set up a new digital wallet. But the market for push payments is remarkably bigger, and, estimated at $30 trillion, six times greater than the debit market, encompassing all types of paper and electronic transactions: corporate disbursements, payroll, contractor payments, insurance payouts, loan proceeds, and more.

Early adopters of this capability have been P-to-P payments applications like Square Cash, consumer facing services, and digital only company disbursements like Uber. Now, the availability of push payment platforms and gateways have extended the capability for push payments to those that send legacy paper check like insurance companies, large employers, retailers, and more.

These companies are incentivized by speed of payment (instant), consumer loyalty (choice and convenience), and cost savings (up to $10 per paper check issued). Payment originators that move quickly can be seen as innovative by their customers while significantly improving their bottom line performance. By enabling complete consumer choice, payors drive higher satisfaction and engender long-term loyalty.

A generation of consumers and contractors raised on smartphones expects to receive payments instantly into the account of their choice since they will not suffer disruptions or excuses. Their blame for failed transactions or delays will fall on the shoulders of the originator, not the underlying technology providers. To mitigate this risk, payors must choose providers that deliver ubiquity or reach to end consumer financial accounts, redundancy for guaranteed transactions in the case of a network failure, and simple integration for required bank sponsorship, compliance, and other features.

This ability for funds to reach any type of consumer-owned destination account through a push payment is also an enormous opportunity for payment instrument providers like prepaid cards, online wallets, and more. The providers that are quick to market their account features and compatibility to consumers will stand out from these other endpoints and can gain a larger share of wallet.

Let’s use the example of prepaid providers and their new usage potential. With the emergence of push payments, consumers can receive proceeds from insurance payouts, payroll, reimbursements or refunds, and more directly onto their preferred prepaid card. It also enables applications like pay-anyone P-to-P, in which one prepaid card user can send money directly to another’s card. Users can also leverage me2me account funding to send funds from a bank account to their prepaid card.

By positioning prepaid cards as easy to use, highly utilitarian financial tools for customers, providers can also make them indispensable. This growth in use cases for prepaid cards as destination accounts will ultimately increase prepaid card load, a key driver of downstream spending, account lifecycle, and prepaid economics.

This same opportunity exists for other payment types. Providers must be ready to move faster than their competitors to earn a share of this enormous payments volume. They should begin messaging to their customers now. Provide them with clear, actionable marketing around push payment capabilities and how to use their specific instrument as destination accounts.

This emerging payment type is here to stay. The benefit to consumers is immeasurable, and they have spoken clearly that they expect this functionality. Same day payments are no longer good enough.

Legacy paper payers and payment instrument providers of all types must engage today or risk being left behind. By developing and investing in their strategies for deploying push payments, payment originators can earn customer loyalty while dramatically cutting costs. Similarly, payment providers that enable and promote these transactions stand to gain share of wallet with consumers and firmly establish themselves on the ground floor of push payments.