Push-to-Card (P2C) Payments | B2B Finance Glossary
What is a Push-to-Card (P2C) Payment?
A push-to-card (P2C) payment – also known as a push payment, a digital disbursement, or a debit card disbursement – is a type of payment solution that allows a cardholder to send or, in other words, “push” money to another cardholder. This is the opposite of a pull payment, which enables funds to be pulled from one account and sent to another. In a pull payment, the payee is authorized to collect or “pull” money from another account and move it to their account. In this way, payers are not responsible for moving funds themselves, and they allow payees to take money from their accounts automatically – something that contrasts with push-to-card payments.
How do Push-to-Card Payments Work?
Unlike pull payments, push-to-card payments allow payers to actively “push” their money to another card. Push-to-card payments are, at the most basic level, sent through the card networks in reverse. Disbursements to the merchant are sent from the sender through their acquiring bank or payment service provider to the customer’s issuing bank in real time. This allows customers to get instant access to funds in their accounts.
Regarding infrastructure, digital disbursement technology provides a reliable and feature-rich framework by taking advantage of the existing card networks. The ability to receive funds via a payment card – typically a debit card linked to a deposit account – allows for a seamless customer experience, especially because individuals can easily access their desired card information. On top of that, the receipt of funds via a consumer’s debit card increases engagement with that card, resulting in incremental card usage and an increase in incremental revenue for the card issuer.
Additionally, it’s important to note that lenders can work with their payment processors to incorporate existing fraud detection, anti-money laundering (AML) precautions, and Know Your Customer (KYC) programs built into their card servicing products regarding push-to-card payments.
How Are Push-to-Card Payments Used?
Push-to-card payments are the most common types of payments used for peer-to-peer (P2P) payments, but push-to-card payments can also be used for disbursements. This is because push-to-card payments allow funds to be transferred through card networks such as Mastercard or Visa since both companies offer push-to-card services (Mastercard Send and Visa Direct programs, respectively). On top of that, some payment processors offer push-to-card disbursements as part of their available features.
Additionally, insurers can benefit significantly from push-to-card payments because they offer much faster and simpler ways to pay out claims to their customers. Push-to-card payments happen instantly, which helps increase customer satisfaction across the board.
Why Are Push-to-Card Payments Important?
Push-to-card payments are becoming increasingly popular on a global level as a result of the fact that they deliver significant value to all participants, including financial institutions, social platforms, enterprises, and third-party service providers. The most critical component of push-to-card payments is that they can be completed in real time. This essential factor meets the expectations of consumers conditioned to use digitally powered solutions.
As a result of the fact that push-to-card payments can transfer funds instantly, these types of payments have become a favorite of younger generations – something that can be seen through the widespread adoption of products such as Venmo.
What Are the Advantages of Push-to-Card Payments?
Push-to-card businesses are simple, practical, and efficient. The payee's card details are all a payer needs to initiate the payment. Then, the payment can be settled in real time, even more quickly than a bank-to-bank transfer. As a result, push-to-card payments are very convenient when paying one’s peers and receiving company disbursements. In contrast, bank-to-bank transfers can take a few days to process.
Push-to-card payments allow customers to access their funds immediately, which offers relief and creates a superior customer experience. Additionally, as the market has become increasingly used to digital products and services, convenient payments are not just something consumers think of as a nice-to-have. Now, they are seen as a necessity.
For businesses that hire gig workers, freelancers, seasonal contractors, and other nontraditional workers, push-to-card payments offer an immediate transfer option when it comes to payments. Temporary workers often deal with financial insecurity, and immediate payments can be a game-changer in staving off employee turnover caused by financial stress.
The ability to offer immediate transfers through push-to-card payments empowers workers by allowing them to access their payments more quickly. It simultaneously allows them to expand their options for using their earnings, including savings, investments, and paying bills on time.
Push-to-card payments are a way for businesses to show that they understand the needs of their customers and workforce and help prove that they can deliver the offerings required to meet those needs.