Pros and Cons of using PayPal Payouts for Mass Payouts

There are a variety of electronic payment types available that reach suppliers worldwide. Along with ACH, Global ACH and wire transfers, PayPal is one of the best-known methods. When considering how to make payments to affiliates, publishers, developers, or other suppliers, remember that while PayPal is ubiquitous, it is not the best payment method in every situation.

A large number of payments are made on a daily basis through PayPal. In 2012, over $315 million was spent, every single day, on average. In fact, over 18 percent of eCommerce is handled by PayPal, amounting to over $56 billion in one year. This means almost a fifth of online payments occurs through this website. But is it the best method for supplier mass payouts?

While PayPal transactions are almost instantaneous and require the payee to provide only their email address, there are a few limitations you need to be aware of:

• Payouts via PayPal are not supported in every country in the world. Wire transfers, Global ACH, and checks, are.
• PayPal payments are made into the payee’s electronic wallet, not their bank account. Unless the payee plans to spend their money using PayPal, they need to move the money into their regular checking account. In some cases, there may be a timing delay to transfer funds to your bank account from PayPal. Also, of course, the transferring activity from Paypal to the bank is just one more step they need to take so that takes extra time and hassle.
• If you have thousands of payouts to make, handling each payment through a website like PayPal will likely require a programmatic solution through the API.

These issues highlight the importance of automated payout platforms as a solution you should consider. These platforms aggregate all payments to all payees, in all payment methods (including PayPal) into one, easy to use, solution.