One API, Endless Possibilities

A payout API is an application programming interface (API) that enables companies to automate the disbursement of funds to recipients such as employees, vendors, contractors, or customers. 

Payout APIs streamline various types of payments, including salaries, reimbursements, refunds, affiliate commissions, royalties, and more. 

These APIs connect the company’s financial systems with payment gateways or financial institutions, allowing for secure, efficient, and automated payment transactions.

Key Features of a Payout API:

1. Multi-Currency: Payout APIs often support multiple currencies, making them suitable for organisations with international transactions and pricing. This allows companies to send payments to recipients in their preferred currency, handling conversion when necessary.
2. Multiple Payment Methods: Payout APIs typically support various payment methods, such as:
   • Bank transfers
   • Digital wallets (e.g., PayPal, Venmo)
   • Debit/credit card payouts
   • Mobile payments or payloads
   • Cryptocurrency payments
3. Automated Payments: Payout API enables the automation of payment processes. This eliminates the need for manual intervention. Businesses can schedule recurring payments, initiate batch payouts, or trigger payments based on predefined criteria.
4. Global Reach: Payout APIs are designed to handle cross-border transactions. This allows companies to send payments to recipients in different countries while complying with local regulations and banking requirements.
5. Real-Time and Scheduled Payouts: Payout APIs enable companies to initiate real-time payments or schedule payouts at specific times. This helps meet different organisational needs, like urgent payment requests or payroll processing on specific dates.
6. Security and Compliance: Payout APIs are typically built with security protocols like encryption, tokenization (access token), validation, and two-factor authentication (2FA) to ensure the safety of sensitive payment data. They also support compliance with regulations such as Anti-Money Laundering (AML) and Know Your Customer (KYC).
7. Customisable and Scalable: Companies integrate payout APIs into legacy systems and workflows to suit specific needs and use cases. The scalability of the API means it can handle increasing transaction volumes and card payments as the business grows. Some may also come with SDKS for pagination.

Transaction Tracking and Reporting: Payout APIs will give you detailed transaction tracking (like payout ID, payment details, phone number, account number, currency code, and other identifiers), reporting, and notifications, allowing businesses to monitor the status of payouts and generate reports for accounting or auditing purposes.

A payout API enables companies to integrate automated payments directly into their software. It connects financial systems (like accounting, payroll, or e-commerce platforms) with payment processors or business accounts to facilitate the seamless transfer of funds to recipients.

Here’s how a payout API works:

API Integration
You integrate the payout API into its existing systems (like accounting, payroll, or invoicing software). This involves configuring the necessary endpoints and authentication mechanisms using the API’s documentation.

The business usually receives an API key or token from the payout provider. This auth must be passed with each request to verify and authorise the transaction, ensuring secure communication between the business’s platform and the API provider.

Initiating a Payout Request
The business sends a payment request to the payout API to initiate a payout. This contains details like:

• The recipient’s information ( bank account details, email, mobile number)
• The payout amount
• Currency (USD, EUR, etc)
• Payment method (bank transfer, digital wallet, or debit card)
• Schedule (real-time or scheduled payment)
• Any additional metadata or payment notes

For example, in a gig economy platform like Uber, the system would send a payout request to the API after a driver completes a ride.

Processing the Payout
The payout API validates the request to ensure that all required fields are filled out and that the payment method is supported. It may also check whether funds are available.

The API provider often performs compliance checks to verify that the transaction complies with regulatory requirements such as Anti-Money Laundering (AML) or Know Your Customer (KYC) rules.

Once validated, the payout API processes the transaction by connecting to a payment processor, bank, or payment network. Depending on the recipient’s location and payment method, the API may initiate a bank transfer, digital wallet transfer, or credit/debit card transaction.

Confirmation and NotificationsTransaction Confirmation
Once payment is processed, the payout API sends a confirmation response to the business’s system. This includes the transaction ID, status (success, pending, or failed), and the estimated settlement time.

The payout API triggers notifications (such as email or SMS) to the recipient, informing them that a payment has been made and providing the right docs and transaction details.

For example, in an e-commerce business, a customer might receive an email confirming a refund has been issued through the payout API.

Additional Steps

• Settlement time may be instant or take a few days
• The company can monitor the status of the transaction
• Comprehensive reporting features for payout activity
• Error handling with corrective action
• Retries and failures for unsuccessful payments

With Tipalti’s multi-entity payout API, your business can onboard and manage payees and make global mass payouts to freelancers, contractors, creators, streamers, developers, affiliates, publishers, and suppliers using efficient batch payments with multiple electronic payment methods in over 196 countries and 120 currencies. 

These payouts are automatically coded and recorded in your ERP or accounting system through a data sync.

To integrate a payout API into an accounting or financial system, such as an ERP, your company can use REST APIs and resource-oriented URLs encoded in JSON formats with enhanced filtering, HTTP status codes, and business codes by following the third-party software company’s instructions for software developers.