An increasingly complex global economy has created the need for automation and global payment solutions. Mass global payouts occur every day by companies competing in a virtual economy that knows no borders. Cross-border payments happen so often within the sharing economy and online marketplaces, the complexity of such payouts is often taken for granted.
Global Payments
Mass payout are complex at a domestic level, but with international expansion comes global payment issues. Regulatory compliance issues coupled with complex taxation laws and validation needs create issues for global brands of all sizes. Offering payments and support in multiple and currencies languages is a critical component of a global mass payment process. Offering multiple payment options with active payment status communications helps retain partners even in under-banked countries.
Payment Error and Mass Payouts
Making mass payouts is not a simple task. In competitive verticals like online marketplaces, partner retention and attraction requires a sophisticated and reliable payments workflow. As the volume of mass payouts increase payment error risk grows exponentially. A recent survey found that well over 50% of of respondents experience a payment error rate of over 1% with nearly 32% of respondents experiencing a payment error rate of over 3%. While 3% doesn’t sound like a huge number, imagine a ride-sharing company that makes mass payouts to hundreds of thousands of drivers every week. A 3% payment error rate could cost the company millions of dollars every month.
Using PayPal MassPay for Global Payouts
Many early-stage companies turn to a product like PayPal’s MassPay to make global payouts. MassPay can be a great product for remittance purposes, but the platform can be limiting as payment volume and number of payees increases. An intuitive and white-labeled payee on-boarding experience is critical to your brand. Checking new and existing payees against do-not-pay lists while collecting the proper tax forms is crucial. And perhaps most important, PayPal does not work for every jurisdiction. For those countries, alternative payment methods need to be considered.
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Cross-Border Payments
Global payouts are a type of cross-border payment that generally consists of a high volume or regular frequency of payments and is specific to the payout function of payment processing. Cross-border payouts are subject to a complex set of laws and regulations aimed to prevent the fund of terrorist organizations and prevent money-laundering. Sometimes international money transfers involve a single currency, while other transactions involve a foreign exchange currency conversion.
SEPA Transfers
Global payments incur different sets of regulations depending on which countries are sending and receiving the payment. Payouts that occur between two countries within the European Union often fall within the Single Euro Payments Area or SEPA. SEPA transfers can be much less complex than traditional global payments as they are generally considered the equivalent of a domestic money transfer.
