The transportation industry is a high-speed world of logistics and delivery where efficiency and speed are paramount, but the methods many transportation companies use to conduct financial transactions are not evolving at the same pace.
A recent PYMNTS Intelligence report titled “Faster Than Ever: Real-Time Payments in the Transportation Industry,” published in partnership with The Clearing House, examines this mismatch between the industry’s core business operations and its payment systems as a barrier to growth and profitability.
The lingering shadow of legacy payments
Although the industry has made great strides in adopting digital technologies, checks remain a common payment method. According to the report, 57% of total payment volume in the transportation sector is still processed by check, followed by automated clearing house (ACH) payments and finally credit cards.
This reliance on outdated infrastructure slows operations, creates room for errors, and increases costs. For truck drivers, who often work long hours away from banks or ATMs, cashing checks can be a time-consuming and inconvenient affair.
The use of checks creates vulnerabilities in the supply chain. Lost or stolen checks can lead to financial loss and business disruption. Manual check processing is also labor-intensive and prone to errors, increasing the risk of fraud and reconciliation issues.
The obstacles to real-time payments
Despite the clear benefits of real-time payments, their adoption in the transportation industry has been slower than in other sectors. Several factors contribute to this reluctance.
First, many transport companies, especially smaller ones, may lack the technological infrastructure or financial resources to adopt new payment systems. Second, security and fraud concerns may prevent companies from adopting real-time payments. Third, a lack of awareness of the benefits of real-time payments and the options available may hinder adoption.
Consider the 24% of small and medium-sized transportation companies (SMBs) that do not use digital payments and say their banks do not offer them. PYMNTS Intelligence found that 29% of transportation companies that did not use instant payments in the past year cited difficulty in using them or lack of knowledge as barriers. Cost concerns also played a role, with 23% saying instant payments were too expensive. In addition, 22% pointed to limited acceptance by payees.
The promise of real-time payments
The potential benefits of moving to real-time payments for the transportation industry are significant. By eliminating the delays associated with check processing, companies can improve cash flow, reduce operating costs, and increase customer satisfaction. Additionally, real-time payments can streamline financial processes such as payroll and invoicing, resulting in greater efficiency and accuracy.
For truck drivers, real-time payments are a more convenient and secure way to receive their pay. With no need to physically cash checks, drivers can access their pay immediately, improving their financial situation and reducing stress.
Truck drivers overwhelmingly prefer instant payments, with 93% saying they would use them if offered. Those who already receive instant payments cite speed, security and guaranteed funds as key benefits. Despite this preference, only 40% of truck drivers currently have access to these payment methods.
To realize the full potential of real-time payments in transportation, collaboration among stakeholders is needed. Financial institutions should provide user-friendly solutions and training, technology companies should develop tools that integrate seamlessly, and government policies should provide incentives and support. Together, these groups can address challenges and drive wider adoption of real-time payments to improve efficiency and growth in transportation.
