PayPal (NASDAQ: PYPL) and Fiserv (NASDAQ: FISV) are partnering to give Venmo users another bank account-like perk: offering paycheck deposits directly into Venmo accounts, the companies announced recently. Because digital wallets are becoming more popular, the agreement between these two companies is now concentrated on providing faster accessibility to payouts as well as new marketing choices on Venmo.
"The use cases that this can support are a 1099 (independent contractor tax form) payment for a gig economy worker, a claim payment for an insurance company, a tax refund from the federal government and more." Nandan Sheth, global head of payments at Fiserv, informed CNBC prior to the release. "It's a combination of convenience and real-time payment experience combined together for the consumer."
The companies like Lyft (NASDAQ: LYFT), State Farm, and FanDuel are presently Fiserv consumers that are able to obtain access to this particular technology instantaneously, CNBC reports.
Fiserv has also revealed that it will remain in conversation in order to authorize payments that can be sent straight to PayPal or Venmo. Through the usage of digital payments, various companies will be able to salvage time and money, as well as eliminate expenses that are linked with the administering of paper checks.
Along with payments to digital wallets like PayPal and Venmo, companies will be able to distribute digital payouts through customers' credit or debit cards, ACH, prepaid card, or digital checks.
As long as customers are choosing to accept the depositing of business-to-consumer payments into PayPal, Venmo, or Cashapp, the collaboration has the ability to interrupt and vastly change the way that customers bank, says Dominick Gabriele, senior fintech and specialty finance analyst located at Oppenheimer.
"It's sticky. It's automated so the chances of you taking the time to switch that around are very low. And you link other accounts, you are opening a debit card with that institution, you might open a credit card with that institution because that is where your money is," said Gabriele, in a statement to CNBC.