When it comes to payouts, (i.e. the simple act of sending or disbursing funds), organizations are met with widely varying preferences from payees. Whether they’re claimants, workers, suppliers — anyone accepting payments nowadays has their own personal preference when it comes to how they’d like to collect their funds.
The challenge lies in choosing Payout Methods that both satisfy your organizational goals and ensure payee happiness and satisfaction. One size does not fit all, and in some cases, the lynch pin could be adding additional services to existing payments solutions, thereby creating a more holistic and attractive service offering for payees. Whatever the case, we’ve compiled a list of the top 5 considerations when choosing the right method, or methods, to offer your payees.
How Business Objectives Impact Payout Method Selection
Before weighing out the various considerations, it’s important to take stock of your organization’s business objectives, or value drivers. These are the driving force(s) that help fuel any financial, operational, and growth-related decisions within your business. Identifying and managing business goals helps your organization focus their attention on activities that will have the greatest impact on value. Examples of the goals behind these drivers could be:
- Reducing business costs
- Increasing operational efficiency
- Investing in global expansion
Whether you’re looking to tackle global expansion, or improve conversions in your domestic market, the most successful payout adoption program will work to help you accomplish these business value drivers as well as help improve the experience of your payees at the same time. So, how do the following considerations ladder up to help drive business success?
Top 5 Considerations for Choosing the Right Payout Method
While this list isn’t exhaustive, it serves as a good starting point in determining the payout methods that may hit the sweet spot between satisfying your payees preferences and meeting your business’ objectives.
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Payee demand and demographic
Does your grandma still send you a $20 check in the mail for your birthday? There’s a reason for that. Her generation relied on checks as a primary form of payment. Just as Gen Z payees in Zürich may not value the same payout methods as Baby Boomers in Boston. The most important consideration when selecting a payout method, unsurprisingly, is understanding your (possibly diverse) payee demographic, listening to your payees’ preferences, and adjusting your payout offerings based on that feedback (and what’s possible for your organization).
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User experience
The payout experience for the end user can say a lot about your business, and even reflect on your values. For instance, an intuitive self-serve experience for payees to collect payments in their local currency (even if it differs from the base currency of your business) goes a long way to building positive brand sentiment and trust.
Further, a branded experience for payees can be an important asset to help drive business performance, build loyalty, and inspire action from your payee or user base. While there are obvious benefits to having happy payees, such as loyalty to your organization or brand, you could also be differentiating your business from a competitor who doesn’t offer as many payout options, as much flexibility, or as convenient an experience.
Experience is twofold; of course, the payout experience and ease of use for payees is important. However, initial adoption, integration, and automation of payout workflows for stakeholders within your business operations teams are also crucial considerations. Carefully evaluate options can help ensure that you aren’t adding any additional effort or strain on your development or in-house payment teams, where applicable.
You may need a payout mechanism that’s integrated into your existing site or platform, or it may make sense to adopt an external turnkey environment and simply white label the front end. Either way, if you’re looking to adopt an experience where payees can self-serve, it needs to streamline the workflow for your business without adding any complexity.
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Cost
Well, no surprises here: this is a big one. Payout methods have inherently different cost and transaction structures — for both organizations and payees — which should be taken into consideration.
When sending international payments, fees can be applied at significantly varied rates depending on the method that is used. Not surprisingly, the more frequently a payee collects their funds, the higher the likelihood of those transaction fees piling up. Exchange rates and currency flips should be front of mind when considering payout methods for a globally dispersed network.
Businesses should also account for the ongoing internal costs that can arise due when supporting one or multiple payout options. Payments reconciliation and transaction monitoring are just a couple examples of internal costs tied to the management of multiple payment options. Controlling how transaction reports are generated, the way in which funds are collected, or even how refunds are initiated and managed are also important elements to appreciate here. Partnering with a trusted payout provider, especially one that provides full stack capabilities and integrated treasury management support, can go a long way to helping streamline operations as well as reduce costs both for your payees and within your operational teams.
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Speed and flexibility
Let’s talk transfer times. For some businesses, the statement “payable within net 30 days” simply doesn’t exist. Take the on-demand economy, which prefers payment methods that offer near-immediate confirmation that the transaction was successful, and also, that funds are available for the provider to collect. In this day and age, it just doesn’t make sense to have a business model that centers around the fast delivery of products, or execution of services, and not have a payout structure set up to match that efficiency.
The payout methods that you choose to implement can go a long way in supporting your need for speed… or result in troublesome roadblocks. It’s no surprise then that your company’s ability to be flexible and provide fast and efficient payout optionality to the sellers, drivers, and users on your platform is becoming increasingly more important.
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Geography and globality
The world is getting smaller as it becomes more digital. As these digital experiences start to become the norm, payees are expecting payouts to follow suit and be presented in multiple currencies, diverse payout methods, and languages localized to their region.
Supporting multi-currency payments is critical in facilitating global operations, not to mention multi-currency payout optionality can also help payees avoid being charged high fees for currency conversion.
The relevance of a payout method will depend on the geographic locations where your suppliers or payees are located, and thus where your organization’s payout footprint is looking to reach. For instance, large enterprise or goods and services marketplaces looking to expand need to be able to scale in new geographies without necessarily opening a local entity or having to move funds cross-border. As such, you’ll need to account for any regulations or restrictions in the country or regions you’re expanding to — or find a service that does.
Additionally, some countries have limited banking infrastructure, though this should be a hurdle to your payout expansion and business scalability. Digital payout methods and cash pickup are in strong demand for payees as they appeal to banked, unbanked, and underbanked populations, and can even offer additional benefits to businesses by lower transaction and administrative costs.
Reach Your Business Goals with a Trusted Payout Partner
PayPal’s payout capabilities, powered by Hyperwallet, offer up to 9 unique transfer methods for payees to gain access to their funds. When you choose to work with Hyperwallet, your organization has the ability to enable all or a selection of these payout options for payees to then self-serve and select their preferred transfer method.
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