Small to mid-sized businesses (SMBs) in the transportation industry, including trucking and delivery services, face numerous challenges today, such as rising gas prices, staffing shortages, and inflation driving up the cost of transported goods. One often overlooked issue is the complications associated with legacy payment systems. Many firms still rely on outmoded transaction methods like paper checks and money orders for everything from paying workers to settling bills with suppliers. These payments are prone to delays, errors and other problems.
Integrating real-time payment systems could make transactions in transportation, trucking and delivery faster, simpler and safer. Although some companies in these sectors hesitate to adopt real-time rails due to unfamiliarity, those that have embraced this technology report improved efficiency, healthier balance sheets and a stronger overall financial outlook.
Reliance on Legacy Payments Slows Transportation Firms
The transportation industry uses real-time payments at a much higher rate than other sectors. Seventy-three percent of transportation SMBs utilized real-time rails in the past 12 months, according to a recent PYMNTS Intelligence study. Even so, paper checks remain the most popular payment method overall, at 57% of total payments volume.
Checks remain the primary method for transportation firms, but real-time payments are catching up.
PYMNTS Intelligence research found that paper checks were the most common form of payment for transportation businesses. Checks accounted for 57% of total payment volume, followed by automated clearing house (ACH) payments at 51% and credit cards at 50%. Real-time rails are rapidly gaining traction, however. Nearly half the sector’s SMBs cite instant payment options as their most frequently used method for sending payments. This suggests that while larger transportation firms continue to rely heavily on legacy payments, smaller companies are more swiftly adopting advanced payment technology.
Truckers enjoy the seamlessness and convenience of real-time payments.
Legacy payment methods, such as paper checks, can be frustrating to cash or deposit. This is especially true for truckers who spend significant time on the road and lack the opportunity to visit a bank or ATM. According to PYMNTS Intelligence research, 80% of truck drivers say instant payments are much more convenient for them. Fifty-eight percent appreciate knowing that money is in their account without requiring manual intervention. In addition, roughly 32% of truckers believe immediate access to funds can help them pay their bills on time, which can be challenging if they must first cash their paychecks.
Unfamiliarity Hinders Real-Time Payment Adoption
While real-time payments can significantly improve logistics and revenue across the transportation industry, many firms remain hesitant to implement these systems due to concerns about their perceived complexity.
Transportation SMBs consider instant payments too complex to use.
24%
of transportation SMBs that did not use digital payments say their banks do not offer them.
PYMNTS Intelligence research reveals that among transportation SMBs that did not send any instant payments in the last year, 29% cited difficulty of use or lack of knowledge. Another 23% thought instant payments cost too much. Twenty-four percent said their banks do not offer this service, while 22% cited a limited number of payees that can accept instant payments. Therefore, banks must implement these services and assist their transportation customers in understanding their capabilities.
Lack of education is the primary hurdle for real-time payments.
Cheryl Gurz, vice president of RTP product development at The Clearing House, recently told PYMNTS Intelligence that while many transportation CEOs view real-time rails as difficult to use, this perception does not reflect reality. Many transportation SMBs and consumers are confused by the wide variety of faster payment solutions available, such as Zelle, PayPal and Venmo. They often do not understand how instant payments on the RTP® network differ or what benefits they truly offer.
“It is precision payments, made at the time you need through your trusted banking partner,” Gurz said. “The benefits surpass so many other payment methods, in large part because the transactions are irrevocable. If you get a payment at two o’clock in the afternoon, you can go ahead at 2:02 and make that payment to your supplier. There are no returns.”
Gurz noted that while many banks have updated their systems to facilitate real-time rails, they have not effectively communicated these upgrades to their customers. Therefore, it will be incumbent on banks and financial institutions (FIs) to educate transportation firms about the availability and benefits of the RTP network, integrate it into their online banking platforms and promote its use.
Faster Payments Improve Financial Health
If firms can overcome their hesitation about adopting real-time payments, they could strengthen their financial position, thanks to more accurate accounting and increased employee satisfaction.
93% of truckers would use instant payments if offered.
Moreover, PYMNTS Intelligence research found that 91% of truck drivers who receive real-time payments prefer them for their speed and guarantee of good funds. Additionally, more than half say security is an important consideration. Currently, however, just two in five truckers receive their pay through these channels. Transportation firms that implement these payments could gain a competitive hiring edge, as well as improve employee satisfaction and retention.
85%
of transportation SMBs generating $1M to $10M annually and using instant payments report very or extremely healthy balance sheets.
Three-quarters of transportation SMBs using instant payments show healthy balance sheets.
PYMNTS Intelligence research also shows that 85% of firms generating $1 million to $10 million annually report very or extremely healthy balance sheets. This compares to just 54% of those primarily using non-instant methods. Among transportation firms that sent instant payments in the past year, 68% cited the increased speed as a key benefit. Thirty-seven percent consider it the most important factor. Other top benefits included ease and convenience (16%) and better cash flow management (15%). For transportation SMBs receiving instant payments, 40% of respondents identified speed as the most significant benefit. These advantages led to more satisfied accounting teams and improved cash flow efficiency.
Implementing Real-Time Payments in the Transportation Industry
Real-time payments provide immediate benefits for both cash flow management and employee satisfaction. With instant fund transfers, transportation companies can receive payments from customers and settle invoices with suppliers almost instantaneously. This rapid movement of money reduces the need for large cash reserves and improves working capital efficiency.
Additionally, offering instant pay can be a powerful tool for recruitment and retention. Drivers and other employees can access earnings immediately after completing their work, rather than waiting for the next pay cycle. This flexibility is particularly valuable for long-haul truckers, who may need funds while on the road.
Despite these advantages, some in the industry may perceive real-time payments as difficult to implement or unfamiliar. To address this, transportation companies can start by introducing real-time payments in specific areas, such as driver payroll or customer refunds, before expanding to other use cases. This phased approach allows for gradual adoption and helps build confidence in the technology. Furthermore, an intensive educational effort by banks and financial service providers could prove beneficial.
