Real-time payment flows are coming to processor settlements with merchants as Visa Inc. enlarges the market for its Visa Direct push-payment service. The latest development emerged this week with EVO Payments Inc.’s launch of EVO Direct Deposit, a service that relies on Visa Direct to credit U.S. merchant accounts.
The Atlanta-based merchant processor’s venture in real-time settlement comes as many small and medium-size merchants struggle with cash flow as a result of the coronavirus pandemic. States have reacted to the pandemic with restrictions on store hours and customer flow, though retail businesses have been able to reopen in many states.
“Our ability to accelerate our merchants’ access to funds, particularly when they need it most, will provide increased flexibility and enhance the financial strength of their businesses now and in the future,” said Brendan F. Tansill, president of EVO’s Americas division, in a statement.
With Direct Deposit, merchants can register for the service with a debit card and then have funds credited to the card. Deposits can flow at any time, EVO says, including weekends and holidays.
“The opportunity to provide deposits to merchants within seconds or minutes can help merchants, particularly small merchants, to manage their cash flow,” says Sarah Grotta, director of the debit and alternative products advisory service at Mercator Advisory Group, Marlborough, Mass., in an email message. “More important than speed is that it operates every day at all hours. So retailers like bar and restaurant owners who earn the majority of their revenues on Fridays and Saturdays aren’t waiting until Monday or Tuesday for the deposits they need to pay their staff or buy inventory.”
Services like Visa Direct and its rival, Mastercard Send, can credit network debit cards with funds in real time or near real time by means of a payment flow called the original credit transaction. The OCT was originally designed to credit customers instantly when they return merchandise to stores, but has been reconfigured in recent years to offer real-time funding to a broad array of markets.
Still, not many small-business owners have signed up for business debit cards, leaving a market opportunity in the wake of EVO’s announcement, Grotta says. “Today, business debit cards represent a small fraction of total debit cards,” she observes. “This [EVO announcement] is an opportunity for issuers to get behind a small business debit card program to help businesses to not only receive these types of push payments but for other day-to-day purchase transactions too.”
Lately, startups have begun to harness Visa Direct to let businesses speed wages to workers. The latest example emerged this week when a company called Immediate Solutions said it had integrated with Visa Direct to let workers access their pay via a debit card linked to the ImmediatePay app.
All told, there are some 250 programs running Visa Direct for 130 million active users, according to figures Visa released in February for its fiscal 2019, which ended Sept. 30. The quarterly run rate in Visa Direct transaction volume grew from $11 billion for the September 2016 quarter to $68 billion for the September quarter last year. Grotta estimates most of that volume derives from peer-to-peer payments, an original use case for Visa Direct.
While EVO processes for merchants in 50 countries and in 150 currencies, its new service with Visa Direct is available only to U.S. sellers, the company says.