Digital Payouts: A Fast and Seamless Way to Send Money

When a customer purchases something, they make a payment. When a business sends money to a recipient, it’s called a payout or disbursement. In other words, a purchase is an incoming payment; a payout is an outgoing payment as you’re sending money to someone else.

Push to card and push to account

Modern payout services allow you to push money to cards for a variety of purposes. In most cases, you can push to debit and other qualified cards instantly. For example, with Finix’s push-to-card functionality, recipients usually receive their funds within seconds. You can also push funds next-day to individual or commercial bank accounts.

In the past, businesses made payments using checks, cash, wire transfers, or bank transfers. But now, new technologies have made it much easier for businesses to send funds. Here are the top benefits of using a modern payout solution:

1. Efficiency: Payouts offer faster and more streamlined methods for distributing funds to individuals and other organizations compared to traditional methods like checks or cash.

2. Reliability: New disbursement technology is more reliable and trackable. At Finix, you also get 24/7 customer support.

3. Automation: Digital payouts simplify the process, drastically reduce manual work, and minimize errors by providing a way to automate disbursements.

4. Security and compliance: Payouts are a secure way to send money as they follow strict compliance regulations. Payments APIs securely transfer funds or you can make payments via your provider’s dashboard. Finix Payouts include embedded compliance for easier management and more secure disbursements.

5. Diverse use cases: Disbursing funds digitally opens up a multitude of new opportunities and helps build better business relationships.

6. Integration capabilities: Businesses can integrate payouts to use with existing payment solutions for seamless experiences.

7. Cost efficiency: Digital payouts offer a convenient and cost-effective way to manage disbursements and maximize value.

8. Scalability: Payout technology can better adapt to future consumer demand and handle increasing transaction volumes as your business scales.

9. User-friendliness: Payout solutions provide user-friendly interfaces for administrators and payment operations teams.

Across all industries, it’s becoming clear that consumers prefer digital payments. And they want them fast. Here are just a few example scenarios and popular use cases.

Mass payouts

Large businesses often need to disburse funds to many suppliers, contractors, or vendors on an ongoing basis. Digital payouts make this process much more efficient. You can send mass payments to individuals and other businesses all at once or on set schedules. Additionally, you have the option of paying vendors on predetermined schedules.

This also helps cut down on accounting errors, reduces labor time, and lowers business expenses.

Insurance and loan disbursements

Companies using payout solutions in insurance and loans can lower costs, minimize mistakes, and improve customer connections. According to a recent PYMNTS report, when given a choice, 68% of consumers choose to receive instant disbursements. Moreover, 52% of borrowers and 41% of insurance customers are willing to pay a fee for instant funds.

Security deposits for landlords

Another popular use case for payouts is for landlords to return security deposits to renters. This feature lets landlords provide seamless refunds to tenants, which speeds up the lease-end process with little to no effort. Landlords can issue full or partial refund payouts depending on the terms of the lease and the condition of the property.

A survey by Roost found that 66% of tenants prefer to receive digital security deposit refunds. Out of those, 41% would pay a convenience fee for instant refunds.

Payroll

One of the most familiar examples of a disbursement is payroll. Not all that long ago, it was common for employees to get a paper check for their wages. The problem with this method is that it’s a slow and often disruptive process for everyone.

On the employer’s side, they had to print all the checks, sign or rubber stamp them, then get them to the employees. On the employee side, this requires a trip to the bank, where they have to deposit their paycheck.

Direct deposit, which is a form of disbursement, makes payroll a seamless experience for everyone. As of 2022, over 93% of employees in the US get their paychecks via direct deposit.

Earned Wage Access (EWA)

Speaking of payroll, in a 2022 survey, 21% of employees said they would use earned wage access if it was offered. Your business can offer EWA to attract top talent, foster employee loyalty, and improve job satisfaction. This requires your business to keep money on hand for advance funding, but once set up, funds are automatically deposited into the employee’s bank account.

Tax refunds

Gone are the days when it was the norm to receive a check for tax refunds. Many tax preparation companies offer instant refunds or advance refunds to their customers. This helps generate more business and repeat customers.

In 2022, 113,564,000 people chose direct deposits for their tax refund, up 21% from 2019. That’s 68.8% of individual taxpayers. E-filing is now the de facto standard and digital disbursements to receive tax refunds are becoming so as well.

Combine with regular payment processing

Because payment processing and payouts are separate products, businesses usually need two providers. Finix is one of the only providers that offers a complete solution for both.

A great example of combining these services is auto insurance. A consumer can use your payment product to purchase or renew an insurance policy. If they’re in an auto accident, the payment for an approved claim would go through your disbursement service.

The benefit of using a provider that offers both is that it requires less integration time and you’ll have a unified dashboard that lets you access reporting for both services.

Other popular use cases include:

• Marketplaces with multiple sellers

• Commission payments

• Tips

• Contractors and freelancers

• Digital Goods

• Shared and gig economy

When choosing a disbursement service, the price point and speed at which you can push funds should be top of mind. Security and compliance are also key considerations. It’s also crucial to evaluate the level of customer support provided.

You also want a solution that’s simple to use and has real-time reports and analytics. Lastly, you should assess the provider’s scalability.