What does disbursement mean? Understanding digital payments

Digital payments represent an ever-evolving landscape of transactions, especially within the business-to-business (B2B) payments space. By 2023, the Association for Financial Professionals predicts that more than 6.1 billion people will use digital payments.

In fact, research done by Aite-Novarica Group suggests that as more consumers add digital disbursements to their personal lives, businesses have been next in line to adopt more digital strategies toward payments. In May of 2021, more than 85 percent of businesses reported they would prefer to receive electronic payments.

What does disbursement mean?

How do you define disbursement? Merriam-Webster defines “disbursement” as a noun that refers to “the payment of money from a fund.” Within the payments space, a disbursement is simply a payment made from one party to another.

What are the different types of disbursements?

There are several types of disbursements, from cash and paper checks to digital payments and eChecks. A payment (or disbursement) can be made in multiple forms: a cash disbursement, meaning the payment is made using cash; a digital disbursement such as an eCheck, ACH or money deposited directly from a checking or savings account. In addition, a disbursement of funds refers to the paying out of money from a fund, like a bank account.

Understanding digital disbursements

An ideal digital disbursement solution is easy to use, maximizes the opportunity for automation and offers the least amount of disruption to existing processes. Deluxe Payment Exchange eChecks accomplishes this by digitizing the traditional check payment without any changes to your existing accounting processes. This allows you to disburse your funds in a quick, efficient and secure way.

How does a digital disbursement work?

When it comes to eChecks, a digital disbursement is moving funds from one account to another. Only with an electronic check, the process is all digital. This minimizes the average number of people who handle a payment from eight to just two, which also reduces the potential fraud risk that traditional payments experience in the mail. 

Businesses note that the top three barriers to increasing the use of electronic payments are a shortage of IT resources for implementation, lack of integration between electronic payment and accounting systems and the high cost of making changes to internal systems. However, Deluxe Payment Exchange helps businesses automate their payment processes with seamless integration to overcome these barriers.