Instant payments and B2C: Opportunity for efficiencies and modernization

Instant payments offer the opportunity to reimagine many types of transactions. In an earlier article, we discussed A2A payments and how instant payments could benefit depository institutions, brokerage firms and other financial institutions, as well as their customers. A2A payments are just one example across the landscape of use cases that can be modernized with instant payments. The next use cases we will examine are those centered around new opportunities for business-to-consumer (B2C) payments.

What are B2C use cases?

B2C payments are transactions made by a business to a consumer, which could either be an individual or small business. One-time payments, like rebates and refunds, come to mind as key examples. However, they are not the only types of B2C transactions. Paying employees their wages is also a B2C payment, as well as claims disbursements from an insurance company to its policy holders or payments from a larger company to an individually-owned small business supplier. This article discusses how instant payments may be able to improve the payment experience for businesses, their customers, employees and suppliers.

Use case: Rebates

The ability to make a rebate payment instantly from a business to a consumer can benefit both sides of the transaction: consumers receive rebate funds immediately, which they can spend on other things, and businesses can use the rich data capabilities afforded by instant payments to send tailored marketing messages to recipients along with the payment.

Key benefits:

  • Customer satisfaction: Receiving payment from a rebate program generally takes quite a bit of time even after the rebate is approved. Currently, most customers have to wait for a mailed check or prepaid card to receive their funds. Receiving rebates through instant payments would allow for fast funds and happier customers.
  • Cost saving for retailers and manufacturers: Consider the cost savings opportunity for businesses that can cut out the administrative expenses associated with prepaid card accounts or mailing out checks.

Use case: Insurance claims payments

Insurance companies may be able to expedite property and casualty claims payments to their policy holders and to the businesses doing the repairs. In the case of someone whose house burned down, or whose car was damaged, receiving their claims benefit immediately means they have funds to relocate or purchase a new car quickly, which could help provide some relief during an uneasy time.

Key benefits:

  • Immediate funds in the case of an emergency: When an accident happens, the customer often has to wait not only for the adjustor to review the claim and determine a settlement amount, but also for the payment. With checks, the wait time can be several days for the mail and then any hold time the customer’s financial institution might place on the check. Instant payments, in contrast, provide immediate access to these funds, and help ease the pain and stress accidents bring.
  • Staying competitive and retaining customers: With so many apps that make it possible for consumers to comparison shop and change insurance companies almost at will, maintaining customer loyalty is of the utmost importance. As the industry moves to on-the-spot claims approval, the natural corollary is on-the-spot claims payments that are transferred directly to the customer’s financial institution account in near real time. Customers may be more likely to stay with or sign on with an insurance company that offers this benefit.
  • Quick payment, quicker replacement: When an insurance company “totals” a vehicle after an accident, the policyholder will usually receive a payment for the replacement value. The customer is going to be happier with immediate funds so they can quickly replace their vehicle, rather than waiting for the check to arrive in the mail.

Use case: Paying and reimbursing employees

Payroll for employees who get paid on a regular weekly/biweekly basis is generally a pretty streamlined process. The same might not be said for companies that need to pay their employees immediately after service, or in an emergency payroll situation. In these cases, instant payments may be a welcome option for businesses and their employees.

Key benefits:

  • Free up cash flow: In the current payroll process, when employees are paid on a Friday, funds come out of the company’s account 2-3 days earlier. Small businesses may find it beneficial to use instant payments for their payroll because they can wait until Friday to release the funds to pay their employees on that same day. This could make money management simpler and allow for conservation of working capital.
  • Emergency pay, instant pay: There are more than a few instances of payroll that don’t fall into a predictable, 2-3 day cycle. A couple of these include a salary payment to cover an ACH1 transaction that has been rejected or an hourly employee who needs to be paid out on their last day. In these cases, instant payments ensure businesses can make these payments immediately and the employee can be assured they will have access to their pay on the day it is due.
  • Gig and hourly workers: Instant payments make perfect sense, especially for payroll that is issued daily or on demand. The benefits of instant payroll are especially attractive for gig and hourly workers, or even temporary or seasonal employees. Companies that offer instant payroll in these situations will be more attractive and better able to compete for and retain talented and experienced workers.

Use case: Refunds

Merchants interested in enhancing their customers’ experience and generating customer loyalty may want to think about the possibility of instant refunds. Using instant payments for refunds could give customers the benefit of having immediate access to funds after returning a product.

Key benefit:

  • Positive customer experience: If a customer isn’t happy with their purchase, receiving an immediate refund could help ease some of the aggravation the customer may be feeling and help create customer loyalty.

Using instant payments, like the forthcoming FedNowSM Service, for a wide range of B2C transactions can help businesses manage cash flow and enhance the customer and employee experience. The examples discussed in this article just skim the surface of the possibilities instant payments offer for these types of transactions.

Stay tuned as this Instant Payments Education journey continues to explore various use cases and how the power of instant payments can benefit the payments ecosystem as a whole.


1Automated Clearing House (ACH): A system that sends and receives debit or credit payment instructions, referred to as “items,” among financial institutions. ACH items are electronically processed in batches and used for both credit push payments and pull payments.

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