US consumers place a high value on convenience when paying, meaning a smooth checkout experience is key to how they feel about a company or brand — and whether they’ll stay loyal.
But acquiring payments is only half the picture. Disbursements scenarios like refunds, rebates, and rewards are opportunities to increase organizational efficiency, drive positive buyer behaviors, and even win back an exiting customer. From Wirecard’s research into the disbursements space, here are five key insights on what counts when you pay out.
1. Customers want fewer frictions
Customers on the receiving end of payments hold companies to the same high standards they’ve come to expect from the checkout or billpay experience. For example, in Wirecard’s 2019 US Consumer Incentives Survey, 35% of respondents named “a confusing redemption process” as a frustration when cashing in rewards. Another 46% were dissatisfied by long wait times for rewards after applying to redeem them.
Our 2019 US Credit Balance Refunds Survey revealed similar results. Over half of consumers said they had been frustrated by a long wait time for a refund. Significantly, 51% said they valued speed most during a refund experience — much more than other factors, like customer service.
For companies to pay better, they must take to heart the ongoing shift in consumer preferences for speed, convenience, and simplicity. As shoppers gain access to innovations ranging from free, same-day shipping to biometric payments, they’ll expect more from refunds, rewards, and rebates. That means the inconvenience of delayed funds or an unfriendly redemption process could rank higher on a consumer’s list of pain points than they used to, but the flip side is the chance to impress your customers by optimizing payments at every leg of their journey.
2. Disbursements can be streamlined for cost efficiency
While convenience often comes with a price tag, upgrading to digital disbursement payments can actually cut costs and lower the administrative burden.
Checks — a common form of payment for disbursement scenarios like credit balance refunds — are far costlier than the alternatives, despite being less convenient for both payers and payees. Companies pay between $3 and $12 per refund check, compared to less than $1 to issue a digital payment. That means a retail energy provider that issues 195,000 utilities refunds, each year could save as much as $2 million simply by switching to digital payments, based on a Wirecard North America utilities case study.
Going digital also simplifies some of the more burdensome areas of issuing payments. For instance, ensuring payments make it to customers who have recently changed addresses is far simpler when payments follow the digital account holder, not their physical location.
3. Payments improve brand perception and engagement
Just as owning the latest device announces your tech-forward mentality, using up-to-date digital payment technologies lets customers know your company prioritizes innovation and consumer preferences.
It helps to know that for most customers, the ideal payment experience is a digital one. In our consumer incentives survey, Wirecard found that 45% of consumers (the plurality!) preferred digital cards over other incentive payments. And when payment experiences are optimal, consumers engage more willingly with brands. In fact, the majority said that following a positive rewards experience, they were “very” or “extremely” open to offers or notifications from that company.
Another benefit of digital payments is using branded touchpoints to drive desired behaviors — like spendback. For instance, when a customer receives a notification that their rebate or reward is available, they could be encouraged to apply those funds toward their service bill or another purchase.
4. Consumers want digital tools
The global prevalence of smartphones means many customers do everything from shopping to banking exclusively from their devices. Making payouts seamless enough for consumers to manage on their phones represents an opportunity to offer mobile-first convenience: a competitive advantage in a marketplace that’s still uneven when it comes to digital payments adoption.
In our consumer incentives survey, the majority of consumers said they wanted a mobile app to make rewards easier to manage. Companies can also learn from the popularity of P2P payment apps like Venmo in the US, Alipay in Asia or boon. in Europe, which take the friction out of paying the dogwalker or chipping in for a group gift. Whether it’s a colleague’s half of the lunch check or an eagerly-awaited loyalty incentive, payees appreciate the convenience of accepting payments digitally. And, companies benefit from harnessing usage data to perfect the customer experience.
5. Choice of payment method matters
Wirecard found that consumers received incentive payments an average of 2.3 different ways — from account credits to digital prepaid cards that can be added to mobile wallets and used wherever major credit cards are accepted. Naturally, payment preferences varied, with the top three preferred methods being digital cards, physical cards, and electronic bank transfers. (Less than 9% of respondents preferred to be paid by check.)
When it comes to refunds, the majority of customers say they didn’t receive a choice of payment methods, at all. Yet, 73% of consumers said they “strongly” or “somewhat” agree that getting to choose how they’re paid would improve the refund experience.
Diverse preferences may stem from generational differences, with younger consumers opting for the least friction. They could also arise from disparities in financial inclusion, with payees who lack checking accounts often preferring digital or physical payment cards.
Payments are always an opportunity to exemplify your brand values…even when you’re reimbursing an existing customer. Consumers don’t just remember the inconvenient moments; they also hold onto experiences that registered as quick, seamless, and rewarding. That’s an incentive to make sure every step of the payments journey is perfect — from checkout to rebate to refund payout.
Want to learn more about how businesses can improve their payment processes? Download our playbook, Pay Better: How to Build a Digital Payment Solution That Helps Your Customers and Your Business.