Every online transaction has a checklist composed of all the payouts made to various entities involved in each transaction. This includes vendors, customers, employees and financial institutions, among others. For most businesses, manually managing their payouts is quite cumbersome. It becomes a massive obstacle in their growth journey and requires an immediate and reliable solution.
In the tech-driven world we live in, a merchant has the option to leverage tech solutions that can help them streamline vendor payment processes and aspects of managing business finances. There are different types of payouts with varying significance for growing businesses. The more you know, the more informed you will be to decide.
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What is a Payout in the Context of Payments?
Payouts refer to payments that businesses make to all the stakeholders or vendors in a transaction. These include employees, customers, utility service providers, and suppliers. Businesses generally make payouts using RTGS, IMPS, NEFT, cheques and cash as modes of payment for each stakeholder. In addition, customer payout refers to payments that businesses make to customers as refunds, cashback, rewards etc.
For both large and small businesses, the need of the hour is timely management of transfers to customers, vendors, and other stakeholders. This ensures a positive user experience, brand loyalty, and customer retention.
Types of Customer Payouts:
A customer payout is for all businesses that directly serve end consumers. Some of the most common use cases are as follows:
- e-Commerce: Processing refunds for cash on delivery is one of the most significant parts of business operations for e-commerce companies today. This can be a tedious and time-consuming process for both the business and the consumer. Some leading payout platforms and payment gateways provide instant customer refunds. This is done using a generated payment link. This allows customers to pay using their preferred payment modes. Transactions can occur even in the absence of the customer’s bank details.
- Loans and insurance: Leading payment gateway companies help merchants with loan disbursal using instant electronic payment methods such as UPI, IMPS, NEFT etc. They help in settling insurance claims in an instant without verifying the bank details of the customer.
- Gaming business: Customer payouts in gaming allow businesses to easily pay game winnings and rewards to the customer’s bank account or mobile wallet, depending on their choice of payment method.
- Car and furniture rentals: It used to take days to process refunds from rented automobile or furniture companies that hold a security amount, possibly between 8 to 10 business days. The money gets credited to the customer’s bank account only after this. With automated modern payment companies, the payout process is automated, and the refund is transferred immediately to the customer’s bank account or mobile wallet.
- Hospitality, travel and tourism: Hospitality companies are big on promotions all year round. They provide a wide range of discounts, cashback offers, ticket refunds and coupons that customers can claim. These incentives are generally sent directly to the customer’s bank account or digital wallet, which can now be done immediately.
Types of Business Payouts:
Businesses and merchants see various types of payouts. Here are some of the payout types and definition sets you should know as a business owner.
- Vendor payout: This refers to payments that you make as a business owner to suppliers, vendors and wholesalers for products or services.
- Employee payout: Employees get several incentives and rewards in the form of their salaries, bonuses and other perks. These go directly to their bank accounts.
- Partner payout: This refers to sharing contributions or commissions that you give to distributors, retailers and other partners to whom you wish to cross-sell your services and products.
- Utility bill payout: Every business has operational expenses. This includes bills that must be paid every month for electricity, office rent, telephone bills, wifi bills and other miscellaneous expenditures. These payments are covered under utility payments.
Common Problems Facing During Payouts:
Delayed payouts can lead to interruptions in service and varying levels of loss. How often have you been unable to make required payments to customers or vendors but cannot because of the limitations of banking hours? Not only that, but it also makes you lose face as a representative of a brand and business. However, fixed banking hours are only one of the problems businesses face during payouts. Other more common reasons include, but aren’t limited to:
– Businesses can process payouts only using NEFT or RTGS when banks are operational.
– The process gets complicated when you try to upload contacts in bulk while making payouts in bulk due to the complex formats.
– There are limitations and restrictions when you try to add a contact for payouts.
– A bank account’s validity cannot be verified before a payout is made.
– Bulk payouts have limitations when paid through IMPS or UPI.
– A low TPS cap.
– Tracking and identifying errors is not easy because error codes are vague and complicated.
– In case transactions and refunds fail, it’s hard to reconcile.
Types of Payouts Your Payment Gateway Should Support:
Your business needs a Online payment processing solution like Plural by Pine Labs that solves all the restrictions that businesses face with payouts. Such payment gateways help with:
– Bulk payouts: Businesses can make bulk payouts in one go, at any time of the day. All you need to do is upload your contacts and wait for the payment gateway to handle the rest.
– Payouts queue: Whenever you are short on funds but must process payouts, Plural queues up all payouts that cross the fund balance. These are then processed when funds get added to your account.
– Scheduled payouts: You also have the option to schedule payments that have to be to a beneficiary’s account or wallet. This includes monthly or recurring payments, which can get processed as scheduled.
Payment gateways like Plural by Pine Labs overcome the challenges of payouts by recognizing every payout type. This helps them ensure merchant and consumer issues are resolved instantly, and payment workflows run smoothly.