Push-to-Card payments are widely used to instantly move money to a card from various payment method types (such as a bank account). Even though this payment type is already popular both within Peer-to-Peer (P2P) and Business-to-Consumer (B2C) transactions, the term “Push-to-Card” may be new to some. In this article, we discuss what is Push-to-Card, its usages and advantages.
Push-to-Card refers to a payment initiated by the payer. It is a payment solution that allows a payer to actively disburse or “push” money to a cardholder.
Push-to-Card is the opposite of pull payments, a payment type in which funds are pulled from account to the other. Pull payments are initiated by the payee, who is authorised to collect or “pull” money from other payment instruments to their own account. In this case, the payers don’t initiate the movement of funds themselves, and the funds are taken automatically.
A good example of pull payments is Direct Debit, where customers authorise a merchant to pull funds from the nominated account on a pre-determined schedule.
When it comes to Push-to-Card, payers actively push their money to a card. This payment type is most commonly used for Peer-to-Peer (P2P) payments, but it can also be used for disbursements. Money is transferred through card networks such as Visa and Mastercard, using only their credit or debit card numbers.
Push-to-card transactions are essentially sent through the card networks in reverse, from the sender (in case of disbursements to the merchant) through their acquiring bank or payment service provider to the customer’s issuing bank, in real time. As a result, customers have instant access to the funds in their account. Both Visa and Mastercard offer push-to-card services (Mastercard Send and Visa Direct programs).
Push-to-Card payments are extremely simple and practical. Firstly, payers only need the payee’s card details to initiate the payment. Secondly, the payment is settled in real-time, faster than a traditional bank-to-bank transfer. This includes instant bank rails such as Faster Payments (UK) and SEPA Instant (Europe) which can take up to a few hours.
This real-time settlement makes it highly convenient not only to pay to peers, but also to receive disbursements from companies. Insurers in particular can really benefit from Push-to-Card payments, because it is a much faster and easier way to pay out claims to their customers.
Bank-to-bank transfers, although still a popular way to pay out to customers, may take a few working days to be processed. Push-to-Card enables customers to receive their payments instantly and have the funds immediately available in their wallets. Depending on the situation that your customers are in, the immediacy of funds may make all the difference, and turn a stressed customer into a satisfied one.
A key example of this kind of situation is with parametric insurance use-cases such as flight delay cover. If a policyholder is stuck at an airport for a few hours or even needing to stay the night at a hotel, being sent a cheque or a bank transfer that may take a few days is no good to them if they don’t have funds immediately available.
As explained in detail by Venable LLP, card networks are at the top and they establish the rules and technology for facilitating push payments. Beneath them are the acquiring financial institutions (i.e., banks) that are approved by the card networks to originate push transactions and onboard merchants or other service providers to use the push service.
With respect to the actual payments, a push transaction involves a sender (a consumer, business, etc.) who funds the transaction and the recipient of the payment who is a cardholder. Of course, given the variety of potential use cases, there are many different ways in which a push program can be structured, ranging from simple to extraordinarily complex, depending on the number of service providers and partners involved.
Most of the use cases for push-to-card are focused around the concept of ‘speed to pay’, which involves finding ways to move and settle funds in real or near-real time. The reimbursement of claims is the insurer’s moment of truth, especially for those policy holders who require immediate compensation. After all, if the policyholder is affected immediately, why should they be compensated days later? Push-to-card is an effective option for ensuring payment happens when policyholders need it.
Push-to-card services offered by the card brands are helping speed up settlement in a number of interesting ways, including:
Direct transfers between cardholders, including both domestic and cross-border remittances.
Push transactions are being used by a number of payment facilitators and merchant acquirers to improve settlement speeds by sending sales proceeds directly to a merchant’s card account.
One of the most promising use cases is using push transactions to quickly pay funds owed to gig workers or to a business’s affiliates or contractors.
Push services can be used by businesses and government authorities to send funds to individuals for insurance claims, expense reimbursements, benefits payments, and other non-sales payments.
Similar to funds disbursement, push transactions can be used by businesses to pay suppliers for contractual amounts owed (as distinct from individual sales transactions).
Imburse is a cloud-based middleware connecting large enterprises to the payments ecosystem, regardless of their existing IT infrastructure. Through a single connection to Imburse, enterprises can collect or pay out using a variety of payment technologies and providers around the globe.
Imburse can support any payment type, including push-to-card.
In a world where consumers payment preferences and technologies are ever-evolving, Imburse works with insurers to future-proof their payment requirements. Regardless of the business area, market, or requirements, Imburse will connect you to your choice of technology and provider.
Reach out to our team below should you want to discuss how Imburse can help you. Our team is happy to show you what our platform can do for your business and offer you a free demo.
Editor’s note: This article was originally published on the 2nd of March 2022 and has since been updated for comprehensiveness.
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