What Are Mass Payouts?
Mass payouts or mass payments, refers to the concept of paying out to a large number of partners, publishers, suppliers, or sub-merchants – usually on a regular basis. In many cases, it can involve making a high volume of payments in multiple payment methods, multiple currencies, and to countries across the world.
Mass payouts have been getting a lot of buzz recently, especially among technology-based businesses who depend on low churn and partner retention. Brands competing in verticals like online marketplaces, adtech, ecommerce, and affiliate marketing are increasingly faced with issues relating to scalability, tax compliance, and regulatory risk when making mass payments.
Mass Payouts Beyond Payment Processing
The term payout refers to a payment made to a payee. While the core component of any mass payout program is still payment processing, making mass payouts is actually a multi-step process going well beyond the actual remittance of money. In fact, these are areas that are crucial and why a basic banking interface or interface with an ewallet (e.g. PayPal, Payoneer), are insufficient.
Before the payment is even made, partners need to onboarded, tax forms need to be collected, and compliance checks must occur. In other words, they need to be marked as “payable.” Then, depending on the business model and company’s technical infrastructure, the payout platform may need to be integrated with an analytics application (especially for affiliate company or an ad network). Other businesses often need to integrate their payment platform with an ERP. After payment information has been communicated either through an API or file upload, that information needs to be checked and validated. Payment status communication is another critical component of the mass payout workflow that goes beyond the payment itself.
Scaling Partner Payments
Internet brands such as online marketplaces often begin as scrappy startups. Self-funded or bootstrapped, sometimes with a seed investment round, a minimally-viable product (MVP) is often the first iteration of the online marketplace. With a limited amount of money and time, the founders often go for the simplest and most cost-effective method of making payouts to their partners, sellers, or sub-merchants. The MVP approach often involves a labor-intensive manual process. Once product-market fit is realized, it’s time for the company to scale. Scaling a digital economy business means attracting and retaining partners. A process that was once achieved through a manual system can quickly become a growing pain as new partners are continually needing to be undergo onboarding, vetting, and validation.
Mass Payout Services
Digital economies have experienced massive growth over the course of the past decade. With the rise in popularity of streaming video and audio, monetization networks have exploded – new networks seem to pop up almost everyday. These networks help producers and developers monetize their work. Mass payouts are a fundamental business function of these monetization networks. In order to attract quality partners and keep churn rates low, payments must be timely and reliable. In some cases these companies use a ‘home-grown’ solution (a payout platform developed in-house) to execute payouts while others turn to a mass payout service to solve the problem. A number of mass payout services exist and all have their pros and cons. Some of these payout services function well for domestic payouts but lack the capability to execute cross-border global payouts. Other mass payout services are strong when it comes to remittance but lack important functionality needed for payment reconciliation or tax compliance.
Mass Payout Solutions
Evaluating mass payout solutions can often be daunting task. It’s difficult to forecast and account for all of the potential scenario or use cases where more robust features or functionality may be needed. The most pervasive function of a mass payout solution is it’s ability to execute payments. Scaling a mass payout program often requires features that transcend the actual transmission of money. Some of these important features include payee onboarding, payment detail validation and verification, tax form collection, ERP integration, and payment reconciliation. For digital businesses where payees are valued partners, the selection of a robust and scalable mass payout solution can be integral to the success of the business.
Mass Payouts Save Time and Money
Businesses ranging from startup online marketplaces to enterprise software companies have been able to save time and money by implementing a mass payment solution. If your business has relationships with suppliers, partners, affiliates, or publishers internationally – there’s a good chance that a mass payout platform will provide a cost saving. Tipalti offers an ROI calculator to help determine the return on investment that can be achieved by leveraging an end-to-end accounts payable automation platform. In addition to consolidating payment activities into one robust solution, early payments can actually turn your payables operation from a cost center into a profit center.
How much money do you spend per month making payments?
Do you spend more per month making partner payments that the cost of a software solution for payouts? These costs could be associated with a range of activities including mailing and writing checks, to dealing with missed payments or bounced checks. Banking fees whether monthly or per transaction can also add up to hefty sums.
AP automation software for mass payments also saves time. When you’re employing a workforce of accounts payable clerks, managers, and processors you have a direct set of costs associated with the amount of time it takes to manage high volumes of payments. A strong platform that leverages technology to execute these payments and manage the associated activities can reduce workload by up to 80%.