Evolution of Real-Time Payments & M&A Trends

Everyday Payment Platforms Driving Adoption

When was the last time you used a payment service? For many of you, it's probably been as recent as yesterday that you’ve used some sort of payment service. Payment services like Apple Pay, PayPal, and Square are a part of your daily lives. Removing them would be like going back to Blockbuster instead of streaming movies from the comfort of your own home.

Payments services are rapidly growing and have certainly become essential during this social distancing time. Providers like the ones mentioned before are just a few of the most notable services for payments. However, none of them are like Digit.

Payment Delays and Challenges in Digital Transfers

Carlos from Digit mentioned, “consumers' use of physical checks is decreasing about 7% every year, while the use of ACH payments (electronic bank deposits) is increasing about 7% every year.” This shift in consumer behavior highlights the constant takeover of payment services. Although, a major issue that was previously associated with electronic payments was their reliability.

Even though the growth of electronic payments is increasing and becoming the future, its dependability has not been developing at the same rate. Your bank is far more likely to trust a written check deposit vs. an ACH payment deposit. This means using an electronic deposit may force you to wait 5 business days to access your money while your bank verifies and completes your deposit. This delay may affect when you can pay your rent, credit card balance, or loan payment.

Check deposits don’t have this challenge. Funds from them are often available the same day you hand the check over to the bank. Banks are comfortable providing funds for checks before verification because of the protections already set up.

RTP works by combining immediate funds availability, settlement finality, instant confirmation, and integrated information flows. Being a trusted partner, payment providers will temporarily cover payment transfers themselves, and banks will give you immediate access to your deposited funds.

The development of RTP allowed Digit to give users instant access to electronic payment funds and also protect them against overdraft fees. If you purchase a particular feature, Digit will monitor your bank account to prevent your account balance from dropping below an amount you set. Carlos says that hundreds of thousands of Digit users a month use its RTP feature, and generally, Digit will prevent two overdraft fees for any user in their first year of using overdraft prevention.

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