COVID-19 and the Increased Demand for Real-Time Payments

The financial uncertainty many have faced during the COVID-19 pandemic is clear. For many workers in front-line industries, their normal sources of income disappeared and governmental assistance became key to their survival. The uncertainty drove many people to find work elsewhere—a study from UpWork showed that two million Americans turned to freelance work in 2020 and the numbers are increasing in 2021. 

The appeal of freelance work isn’t just the additional income. Workers in 2021 are drawn to positions, opportunities, and products with flexibility and allow them to access earnings or move money quickly. For this reason, this desire for faster pay-ins and payouts isn’t limited to the payroll economy, industries across the country are experiencing an increased demand for faster, real-time payments. 

Are Businesses Ready for Real-Time Payments? 

In the second half of 2020, The Federal Reserve conducted a survey about the market’s readiness for faster payments. In the survey they defined faster payments according to four categories: instant payment services, same day ACH payments, push-to-card payments, and digital wallet-based services. 

After surveying more than 2,000 businesses with revenues between $1 million and $250 million, The Federal Reserve concluded that faster payments adoption is a key priority for most businesses as they future-proof and digitize the customer experience. For larger and medium sized businesses in particular, faster, real-time payments are being adopted to support key use cases including supplier payments, recurring bill pay, payroll, and internal transfers. 

“The pandemic has emphasized the need for real-time payments in the US,” says Craig McDonald, CBO at Trustly. “Consumer behavior and the need for rapid liquidity has catalyzed the development of real-time payment rails and has served as the accelerant of payment transformation in the US.” 

Many businesses from various industries have already started to implement a RTP solution like Trustly's Instant Payouts as a way to further digitize their payments' options and manage cash flow. In fact, in the study by the Federal Reserve, nearly two-thirds of those surveyed (and more than three of four large/very large businesses surveyed) indicate that access to faster payments would factor into any decision to switch banks in the future.

How Do Real-Time Payments Benefit Consumers? 

Beyond freelance and the gig economy, real-time payments deliver important benefits to the end consumer. At the minimum, real-time payments deliver an added layer of convenience and near instant gratification but in some cases, faster payouts can dramatically improve the lives of recipients.  

For example, victims of natural disasters such as hurricanes can go from daily life to devastation overnight. However, the insurance settlements that help families to get back on their feet often take weeks or more to become accessible. With real-time payments, the funds would be deposited directly into the claimant’s bank account, instead of a mail delivered check. This added expediency can help them start repairs, find temporary housing, and get back on their feet more quickly. 
The rise of real-time payments have paralleled the rise of industries that have become popular during the pandemic. For example, marketplace providers, or websites that allow users to offer, sell, and buy or rent items, services, or properties, have grown as a result of lockdowns and the effects of COVID-19—a report by Adevinta Venture and SpeedInvest reports that the world’s marketplaces have reached a combined $5 trillion in value. Real-time payments help compliment the appeal of online marketplaces by allowing marketplace buyers and sellers to get funds settled into their accounts sooner. 

Get Started with Real-Time Payments 

The Clearing House launched the first RTP network for the US 2017. Today The Clearing House works with select FinTech providers to provide real-time payments for a variety of use cases. As real-time payments continue to gain traction, new use cases emerge. Emerging use cases include liquidity management, instant bill pay, crypto payments, and more. 
Trustly Instant Payouts give consumers immediate access to funds, resulting in increased purchase frequency and satisfaction. Instant Payout builds on Trustly’s intuitive and easy-to-use Open Banking Payments user interface. By leveraging The Clearing House’s trusted network, consumers are able to access their payouts in seconds.