Mike West VP, Visa Direct Digital Disbursements, Visa Inc. Talie … · 2018-04-18 · Significant...

Faster Payments 2018

The Faster Payments Reality for DisbursementsMike West

VP, Visa Direct Digital Disbursements, Visa Inc.

Talie Baker

Senior Analyst, Retail Banking & Payments Practice, Aite Group

Visa Inc. & Aite Group. All Rights Reserved.2

The Faster Payments Reality for Disbursements

Market Size, Landscape and Trends

Industry leading research & insights

• Payers

• Consumer Receivers

• Business Receivers

Faster Payments using the card networks

• How it works

• Client examples

• Best Practices

• Benefits


Market Size, Landscape

and Trends

4 Visa Inc. & Aite Group. All Rights Reserved.

Alternative Lending

On Demand

Contract Staffing

Merchant Settlement

Marketplaces

Affiliate Marketing

Lotteries & Gaming

Healthcare

Education

Government

Loyalty, Rebates, Trials

Travel & Entertainment

Faster Settlement Check Replacement

Faster payments opening up new use cases

Estimated Size: $10T

InsuranceSMB Invoicing

Expense Reimbursement

Digital Content

Source: Visa Facts and Figures, McKinsey & Company (2017)


$25B

Affiliate Marketing$25B

AlternativeLending

$1.5T

Contract

Staffing

$77B

Marketplaces

$700B

Merchant

Settlement

Faster Settlement Check Replacement

Significant opportunity to drive payments growth

$1.8T

Government

$3.9T

SMB

Invoicing

$406B

Expense

Reimbursement

$1.3T

Healthcare

$157B

T&E$638B

Insurance

$384B

Lotteries

& Gaming

$61B

Loyalty,

Rebates, Trials

$37B

Education

$70B

Online

Content

Total dollar volume of disbursements is up 48% since 2014

$584B

On Demand /

GIG Economy



“GIG Economy” and Insurance verticals are driving volume growth and demand for faster payments

Vertical Growth Rate %

Marketplaces +121%

Alternative Income +124%

Contract Staffing +40%

Insurance +193%

Government +101%

Source: Visa & Aite Group, Funds Disbursements Research, Estimates 2017


Payers Consumer Recipients

Business Recipients

Cross-border disbursements are also growing

25% 5% 19%

Percentage of Disbursements By Geography 2017

While most disbursements are domestic, more Payers are originating cross-border funds

disbursements and more NA consumers and Businesses are receiving.

US Cross Border

75% 95% 81%

Source: Aite interviews with 30 North American executives Q4 2017, Aite Group survey of 2,379 North American consumers Q4 2017, and Aite Group survey of 154 North American merchants Q4 2017


Disruptive trends

1 P2P disrupting banking

2 Messaging platforms becoming commerce platforms

3 Marketplaces using payments to disintermediate banks

4 “Platforms” enabling entirely new business models

5 Faster payments creating new competition


Industry leading

research & insights

https://youtu.be/nTIhgmqUsVU


Industry leading research & insights

1

0

Payers:

Interviews with 30

executives at major

companies in the U.S.

and Canada making B2C

disbursements.

• Insurance

• Healthcare

• Contract Staffing

• Marketplaces

• Contract Staffing

• On Demand

• Alt Lending

Consumer recipients:

Quant study of 2,379

U.S. and Canadian

consumers aged 18-65

who received funds

disbursements in the last

12 months.

Business recipients:

Quant survey of 154 SMB

merchants in the U.S. and

Canada with annual

revenues between

US$100K and US$10M.


Payer perception on faster payments

Payers who

believe

recipients want

faster

payments

Payers who do not

believe recipients

want faster payments

Payer reasons to offer real-time payments

3

4

4

5

6

27Customer Experience

Improve loyalty

Product Differentiation

Streamline Processes

Reduce Exceptions

Competitive Advantage

Insights: Payers

Improving the customer experience is the most important reason to offer real-time payments

Source: Visa & Aite Group, Funds Disbursements Research, Industry Executive Interviews, Q4 2017 (n=30)

3

27


What real-time options are being evaluated?

Outsource

disbursements

Do not outsource

disbursements

Do you outsource your Disbursements process?

Insights: Payers

Most Payers are looking to provide customers choice and view disbursements as a core process

Source: Visa & Aite Group, Funds Disbursements Research, Industry Executive Interviews, Q4 2017 (n=30)

5

25

4

2

3

4

5

8

13

None

Blockchain / Crypto

Zelle

All Options

Real time credits

Same Day ACH

Push to card


26%

17%19%

38%

None 1 to 3 4 to 10 Over 10

# Disbursements per household last 12 months

Types of Disbursements received in last 12 months

* Consumers indicated a strong preference for options to deposit funds directly to their bank account

Insights: Consumer Recipients

3%

3%

4%

6%

10%

15%

17%

25%

30%

37%

48%

74%

Other

Zelle

Interact eTransfer

Loyalty Points

Push to Debit Card

Prepaid Card

Card Refund

PayPal

Gift Card

Cash / Voucher

Paper Check

Direct Deposit*

*

**

Source: Visa Funds Disbursements Research, Aite Group survey of 2,379 North American consumers, Q4 2017


# Business days before funds availability when

receiving a disbursement today

Source: Visa Funds Disbursements Research, Aite Group survey of 2,378 North American consumers, Q4 2017

6 out of 10 Consumers

would opt-in for real-time

payments when available Fast: 36% Slow: 64%

Insights: Consumer Recipients

Likelihood of adoption for real-time payments

Consumers demanded faster payments but education is required

to improve comprehension, preference and usage

21%

15%

21%

12%

31%

Same Day 1 Day 2-3 Days 4-6 Days > 7 Days


12%

14%

25%

28%

31%

Other

Check

Cash

Debit card

Credit card

Percentage of total payments for my business

Source: Visa Funds Disbursements Research, Aite Group survey of 154 North American SMB businesses, Q4 2017

Insights: Business Recipients

Average Non-Cash Payment settlement time

Same Day

1 Business Day

2 or more

Business Days

44%

Total Card Payments

29%

25%

80% of businesses indicated improving Cashflow as the #1 reason to

adopt real-time payments for business disbursements


Likelihood of adoption for real-time payments

Source: Visa Funds Disbursements Research, Aite Group survey of 154 North American SMB businesses, Q4 2017

Insights: Business Recipients

SMB’s who would switch to a new Merchant

Acquirer who offered real time payments

Small Businesses are likely to switch to a new Acquirer in order to receive faster payments

9 out of 10 businesses

would opt-in for real-time

payments when available

Would switch

to a new

Acquirer

Would not

switch to a

new Acquirer15%

85%


Faster Payments using

the card networks

| Investor Day | June 201718 Visa Inc. & Aite Group. All Rights Reserved.18

Push to Card = Faster Payments using card networks


Billions of cards enabled

for real-time paymentsMillions of connections

already established

Immediately capture

the shift to digital

B2B

P2P

G2C

B2C

44MMerchants

16KFinancial

Institutions

3BCards


Significant Opportunity in Digital Payouts

Note: All brand names and logos are the property of their respective owners, are used for identification purposes only, and do not

imply product endorsement or affiliation with Visa. All brand names and logos are used only as a reference example

Many companies already using Push to Card programs

Lyft “Express Pay”

Allstate “Quick Card Pay”Square “Instant Deposit”

Uber “Instant Pay”


Source: U.S. Visa Direct Monthly Dashboard March 2018.

Note: All brand names and logos are the property of their respective owners, are used for identification purposes only, and do not imply product endorsement or affiliation with Visa. All brand names and logos are used only as a reference example Actual fund availabilityvaries by financial institution. *Visa requires U.S. issuers to make funds available to its cardholders within a maximum of 30 minutes of approving the transaction.

Visa Direct enables companies to deploy new Push to Card payments experiences

2015 2016 2017 2018

Launch Rollout Scale Grow

$ Visa Payment Volume


Reach

Send funds to

billions of cards

worldwide

Security

Tokenization, AML,

OFAC, Compliance,

Limits, Risk

Management

Speed

Real-time with

funds available

within 30 minutes¹

Convenience

Use existing cards

and card payment

infrastructure

Visa Direct Real-time Payments PlatformDisbursement Programs

Visa Direct: Business BenefitsEnables digital customer experiences for disbursement programs

¹ Visa requires U.S. issuers to make funds available to its cardholders within a maximum of 30 minutes of approving the transaction.


How it Works

Businesses / Payer

CUSTOMER EXPERIENCE

Cardholder / Recipient

NETWORK CONNECTION

PROCESSING & SETTLEMENT

Acquiring Bank

Card Issuing Bank

Businesses / PayerAcquiring

Bank

• Use customers own debit card to deposit funds in minutes

• Card eligibility, risk and fraud verification

Pay customer: $250

• Payment Authorization

• Fund Settlement Account

• Reporting / Recon

• Transactions processed in real-time

• Daily Net Settlement

Payment Instructions

Messages Messages


Easy integration to your Payments Platform UX

1. Add push to card to your Treasury or Payments Platform

2. Collect recipient card details to make real time payments to consumers or SMBs


Push to Card improves customer choice and drives higher conversion from paper checks

Push to Card vs. Check Push to Card vs. ACH vs. Check

Consumer Disbursement Preferences

Source: Visa Digital Disbursements: Consumer Preferences Survey, 2017

86%

14%

Deposit to Card Request a Check

61%

33%

6%

Deposit to Card Bank ACH Request a Check


Summary

1 Strong Consumer demand for faster “deposits”

GIG Economy, P2P, Marketplaces, Insurance claims

2 Businesses want faster payments and are willing to switch banks

Ability to attract new business customers and deepen loyalty

3 Start implementing a faster payments strategy NOW

Get to market fast, test and learn, don’t get left behind

4 Add Push to Card to your Treasury or Payments Platform

Card networks provide simplicity, speed, security and scale – easy implementation

5 Push to Card enables digital customer experience transformation

Create Amazon or Uber-like payment experiences for your customers to drive

higher conversion and engagement

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Mike West VP, Visa Direct Digital Disbursements, Visa Inc. Talie … · 2018-04-18 · Significant...

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