Role of complementary new channels in your payments strategy

May 18, 2023

Computers and smartphones have created the expectation in our personal financial lives that transactions should be digital and immediate. Corporate payments are evolving to keep pace.

Traditional corporate payment methods like check, Automated Clearing House (ACH) and wire transfer aren’t necessarily going away any time soon. However, to avoid falling behind, treasury managers are wise to consider replacing them with up-and-coming digital payment channels where those new channels can add value to targeted types of disbursements.

Compared to other developed countries, the U.S. has been slower to shift away from paper payments and embrace new electronic channels. However, in recent years, a combination of the growing acceptance of more real-time digital payments by consumers and Covid-19, which made check payments more problematic than ever, has accelerated corporate interest in digital payments.

In addition to automation efficiency, the new digital payment options offer real-time settlement and guaranteed funds to improve visibility and create payment certainty. Furthermore, one of the most intriguing new payment channels, the RTP® network, provides more extensive remittance information than any previous U.S. electronic payment alternative.

Still, no one expects U.S. companies to quickly pivot entirely away from the traditional payment methods. Many companies have legacy systems that can’t be easily integrated with new payment methods, and businesses often don’t have the resources to invest in long-term projects to produce the needed integration. Also, some of the traditional payment methods offer advantages — such as market ubiquity and the ability to transact large-dollar payments — that most of the new digital channels don’t yet offer.

Emerging new channels and use cases

Companies are seeing the wisdom of moving toward an advantageous mix of traditional and new payment channels. Indeed, the smart strategy is to adopt new payment channels for targeted use cases, ones where a new channel can add major benefits to a specific category of disbursements without overly taxing company resources. 

 “The easiest place to start is by focusing on replacing checks,” says Joe Flaherty, a U.S. Bank working capital consultant based in Portland, Maine. “Companies understand their check processes are extremely expensive and labor intensive, so that’s an area where they want to focus right out of the gate.”

Here's a look at some of the new payment channels that U.S. companies are adding to the mix and the use cases making it worthwhile:

Virtual card: An increasingly common strategy is replacing checks with single-use virtual card payments, where possible. Migrating payments to virtual card can reduce check payment costs and, in many cases, provide payers with revenue share. The virtual card channel is easy to set up and doesn’t require any IT resources. Banks can take the payment instructions file the payer was sending them for check issuance and try to migrate to virtual card those vendors in the file known to accept card payments.

Zelle: The Zelle® digital payment network allows individuals and businesses to send and receive money in near real time using a mobile phone number or email address. Making business-to-consumer (B2C) payments with Zelle allows companies to eliminate the costs of printing and mailing checks, as well as avoid the risks associated with collecting and storing payee bank account information when making ACH payments. Zelle B2C uses include refunds, such as utility refunds to homeowners; rebates; insurance claim payments; incentive payouts; employee payouts; and gig worker payments.

Zelle is gaining traction as a payment alternative in higher education, Flaherty notes. “Zelle is a great option for issuing students convenient refunds when they drop classes, for instance,” he says. “In addition, Zelle serves as a great way to support payments to students after they graduate, when checks often can’t be delivered and cashed due to outdated addresses.”

Push to card (aka “push to debit”): This is another new option for making payments to consumers without requiring them to provide bank account information. The push-to-card channel takes advantage of the fact that most consumers carry a debit card. Companies can use the debit card payment rails to initiate real-time B2C payments — essentially reverse debit card payments — that can support a variety of use cases.

For instance, Flaherty says push to card is ideal for insurers paying consumer claims following a natural disaster. Push to card can provide the immediate funds insureds need to recover and overcomes the obstacle of delivering those funds to people who may have left their homes. “Where it may be impossible to deliver a check or prepaid card by mail to an insured, push to card affords digital, near real-time delivery,” Flaherty says.

RTP: Perhaps the most exciting development in the payment space, the RTP® network is a 24/7/365 payment rail that provides instant settlement of funds, enabling companies to send, receive and request payments for many use cases, including e-invoicing and e-billing. It provides payment certainty — every payment is final, irrevocable and confirmed in near real-time — and rich flexible messaging. RTP can be used for business-to-business payments such as merchant funding and settlement, loan/lease funding and payment on delivery; B2C transactions such as payroll, title and escrow payments, and insurance claim payments; and a wide range of consumer-to-business (C2B) payments. 

One emerging B2C use for RTP is making payroll corrections. In the event there is an issue with an employee’s pay, RTP allows a business to make a real-time correction. “Today, with such an acute focus on employee satisfaction, that’s a huge win,” Flaherty says.

On the C2B front, RTP allows a biller to send a request for payment (RfP) message to a recipient, who can evaluate the request along with related invoice details to approve or deny payment. RfPs provide consumers flexibility and convenience in paying their bills and certainty that the payment has cleared instantly. RfP use cases include online bill pay transactions, loan/lease payoffs and traditional debt payments.

Choosing the right channels

As new payment channels like the ones above continue to emerge and evolve, treasury professionals will be faced with determining which payment channel will make the most sense for each type of disbursement within their organization. Treasury management banks can help in a couple important ways:

  • By offering intelligent payment routing. With intelligent payment routing, a company can send a bank a payment file and have its bank use business rules the company establishes to decide in each case the most appropriate and cost-effective channel for sending that payment out. 
  • By helping companies cut through the payments confusion through consulting. The ideal treasury management bank is adept at helping clients identify niche payment applications where a new payment channel would offer greater efficiency or other benefits.

“Digital transformation is requiring corporate treasurers to revise their payment strategies,” Flaherty says. “Companies should look for a bank that can support them in using both traditional and new payment rails to their best advantage.”

RTP is just one part of a comprehensive payment strategy. If you need help building that strategy, we have the resources to get you started. 

As the payments landscape continues to evolve, U.S. Bank has the expertise and resources to help you build a comprehensive payments strategy both for today and the future. Contact us for more information.

Related content

How Everyday Funding can improve cash flow

How COVID-19 is transforming healthcare payments

White Castle optimizes payment transactions

Increase working capital with Commercial Card Optimization

Transition to international ACH

How to improve digital payments security for your health system

Drive digital transformation with payments innovation

Access, flexibility and simplicity: How governments can modernize payments to help their citizens

Enhancing the patient experience through people-centered payments

Tap-to-pay: Modernizing fare payments pays off for transit agencies and riders

Digital trends poised to reshape hotel payments

Restaurant survey shows changing customer payment preferences

Ways prepaid cards disburse government funds to the unbanked

Rent payments: What’s changing for commercial real estate

Government billing survey: The digital transformation of the payment experience

Unexpected cost savings may be hiding in your payment strategy

3 reasons governments and educational institutions should implement service fees

Benefits of billing foreign customers in their own currency

Top 3 ways digital payments can transform the patient experience

Hospitals face cybersecurity risks in surprising new ways

Navigate changing consumer behavior with service fees

Take a fresh look: mass transit is going places

Creating the ideal patient journey

Modernizing fare payment without leaving any riders behind

5 reasons to upgrade B2B payment acceptance methods

3 benefits of integrated payments in healthcare

Addressing financial uncertainty in international business

Webinar: AP automation for commercial real estate

How blockchain technology is changing treasury

Innovative payroll solutions may help attract hourly workers

Beyond the back office: real-time payments

The future of financial leadership: More strategy, fewer spreadsheets

Crack the SWIFT code for sending international wires

How AI in treasury management is transforming finance

Three healthcare payment trends that will continue to matter in 2022

Cashless business pros and cons: Should you make the switch?

Making the cross-border payment decision: Wire or international ACH?

3 ways to make practical use of real-time payments

Instant Payments: Accelerating treasury disruption

4 ways Request for Payments (RfP) changes consumer bill pay

Can faster payments mean better payments?

Hospitals face cybersecurity risks in surprising new ways

Tech tools to keep your restaurant operations running smoothly

Consolidating payments for healthcare systems

Automate accounts payable to optimize revenue and payments

Enhancing the patient experience through people-centered payments

Digital trends poised to reshape hotel payments

Restaurant survey shows changing customer payment preferences

Webinar: Approaching international payment strategies in today’s unpredictable markets.

Webinar: CSM corporation re-thinks AP

Banking connectivity: Helping businesses deliver the easier, faster, more secure customer experience of the future

How COVID-19 is transforming healthcare payments

Transition to international ACH

Unexpected cost savings may be hiding in your payment strategy

The surprising truth about corporate cards

ABCs of APIs: Drive treasury efficiency with real-time connectivity

Want AP automation to pay both businesses and consumers?

Standardizing healthcare payments

Role of complementary new channels in your payments strategy

How the next evolution of consumer bill pay makes it easier to do business

Higher education and the cashless society: Latest trends

Payment industry trends that are the future of POS

5 winning strategies for managing liquidity in volatile times

What corporate treasurers need to know about Virtual Account Management

4 benefits to paying foreign suppliers in their own currency

Leading the way for real-time payments

Real-time payments fuel innovation

Real-time answers about real-time payments

Colleges respond to student needs by offering digital payments

Improve government payments with electronic billing platforms

Integrated payments healthcare benefits

Escheatment resources: Reporting deadlines for all 50 states

Luxury jeweler enhances the digital billing and payment customer experience

Automate escheatment for accounts payable to save time and money

A simple guide to set up your online ordering restaurant

ePOS cash register training tips and tricks

Understanding and preparing for the new payment experience

Key considerations for online ordering systems

How Everyday Funding can improve cash flow


Start of disclosure content

Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rate and program terms are subject to change without notice. Mortgage, home equity and credit products are offered by U.S. Bank National Association. Deposit products are offered by U.S. Bank National Association. Member FDIC.