The Business Advantages of Real-Time Payouts Graphic

How Orum’s Momentum platform optimizes the payout process, helping companies streamline their operations, delight their customers, and propel their brand ahead of the competition

In use cases across verticals, the ability to offer real-time payouts isn’t a nice-to-have feature—it’s essential when it comes to enabling efficient transactions, boosting customer engagement and retention, and staying ahead of the market curve.

And yet, after their inception in 2017, real-time payment (RTP) rails ramped up slowly, taking several years to achieve wide adoption among financial institutions. Until recently, RTP coverage was so limited that several companies—particularly major players in the gig economy—had to build alternative solutions in-house to realize real-time payouts.

Now, there’s an easy way for all companies (and their customers) to benefit from real-time money movement. Below, we explain how Orum’s embeddable API, Momentum, is changing the payouts game and why that matters in verticals from investments to gig work to insurance claims.

A short history of real-time payments

When The Clearing House launched the RTP rail network in 2017, the new payments infrastructure made fast, 24/7/365 payments a reality in the U.S. Despite a slow start with limited coverage, the RTP network now serves a vast range of financial institutions, holding 73% of demand deposit accounts (DDAs) across the country, making it a great option for real-time payouts.

RTP has transformed the customer experience and driven onboarding and retention rates. According to a 2020 study, 70% of consumers who have used real-time payments would be “very” or “extremely” likely to use them again. And 30% consider RTP a key factor when selecting a financial institution, with 25% willing to switch banks for access.

Before the RTP network existed, gig platforms like Uber, Instacart, and DoorDash recognized the need to pay workers quickly after completed shifts to remain competitive in the increasingly crowded gig economy. Industry leaders ended up creating their own solutions for real-time payouts, like pushing workers’ earnings directly to branded debit cards.

The need for inclusive access to RTP

Real-time payouts like these have become immensely popular. One recent survey shows over 70% of gig workers prefer to receive wages the same day they work, and around 94% associate faster pay with greater financial peace of mind.

But workarounds like branded cards aren’t a feasible path for all companies, as many teams don’t have the time or resources to invest in building a proprietary payment system from scratch. Nor are they a perfect solution, since they limit where and how consumers can take charge of their own money.

What’s missing in this equation is a simple way to let every business leverage the reliable, real-time payment capabilities RTP rails already provide. That’s where Momentum comes in.

A smart, universal solution for real-time payouts

Momentum is an embeddable platform for money movement, meaning companies can add its API-based solutions to their existing programs and easily harness the smart, real-time payment power of RTP without the hassles of a bank integration.

By utilizing RTP payment rails, Momentum can settle payments instantly and around the clock, including on nights, weekends, and holidays. There are no time-based cutoffs, and payments are unbatched, so finance teams have visibility into the details of each transaction for easy reconciliation and reporting.

Key use cases for real-time payments

There are numerous ways businesses can leverage real-time payments. Here are four of the top use cases and opportunities where RTP can have a major impact.

1. Real-time investment liquidity

Moving money in real time will give consumers the confidence they need to take a leap and invest for the first time, because they’ll know they can easily tap funds from their brokerage or crypto account if they need quick access to liquidity or face unexpected costs.

Typically, it can take 5 to 7 days to access funds withdrawn from a brokerage account, since that requires selling the assets during market hours and waiting on an ACH transfer for the payout. Shifting from ACH to RTP would shave valuable time off the process.

2. Gig payouts after every shift

In a recent poll, more than half (58%) of gig workers reported that earnings from platforms like Uber, Lyft, and DoorDash were important or essential to fulfilling their basic needs. 

With gig income playing such a central role in their finances, it’s understandable that gig workers would prioritize immediate payouts for hours and shifts they’ve already worked. In fact, according to one study, 70% of gig workers said they’d be more likely to work for a platform offering them near instant pay. This preference remains strong (at nearly 64%) across the general U.S. workforce, which means gig platforms can attract high-performing workers by offering access to RTP.

3. Speedy supplier payments

Marketplace sellers must balance cash flow and vendor payments. Often, supplier terms require payment to initiate the next inventory shipment, and suppliers will wait for these funds to settle before shipping goods. 

Some sellers have turned to alternative short-term financing options to help bridge this cash flow gap, but they’re often forced to pay additional fees or predatory interest rates. 

With real-time payments, sellers could settle their invoices almost instantly—even automatically—and mobilize new shipments in a matter of hours.

4. Insurance payouts the moment they’re needed

By their very nature, insurance claims arise around unexpected incidents that affect consumers’ most vital resources—like cars, homes, healthcare, and employment—and cause a significant financial strain for anyone involved.

Most consumers can’t wait for an ACH transfer or, worse, a paper check to pay for needed services or to be compensated for lost income. And most aren’t willing to. One study found 69% of policyholders value same-day payouts when evaluating their claim experience, and 53% (including 80% of Millennials and Gen Z) are willing to switch insurers for real-time payouts.

Endless potential

These are just a few of the ways that real-time money movement can solve common business problems while providing a superior customer experience. Just think of the new products and features, revenue streams, and productivity that turnkey, near-instant payment solutions will inspire in industries from manufacturing to e-commerce.

As more businesses gain access to RTP through platforms like Momentum, they’ll discover all the advantages that smart, frictionless payments have to offer—not only to their customers, but to their bottom line.

Excited about the possibilities? Let’s talk.

Want to see what real-time payments can do for you? Check out Momentum’s smart routing and risk management capabilities, and learn how an all-in-one money movement solution can enhance your business.

Or, if you’re ready to get started, reach out for a tour of our platform and hands-on support.

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