Payouts refer to the process of paying out funds to either end users or partners, rather than receiving payment.
Payouts refer to the process of paying out funds to either end users or partners. Payouts play an important role in various industries, such as online gambling, online marketplaces and food delivery services, as well as for affiliate marketing programs. These businesses require the ability to pay out winnings to customers or earnings to partners and freelancers. Payouts may be one-time or recurring, depending on the type of transaction and contractual relationship between the parties.
Not all payment service providers offer payouts, i.e. from the merchant to a third party, as opposed to receiving payments from third parties to the merchant. Payouts can be made via credit card, digital wallets or bank transfer. You can find a full list of all PSPs that support payouts with IXOPAY in our adapter catalog by selecting the filtering options under Payouts.
Payouts can also refer to the process of a PSP paying out earnings to merchants. These can be either automatic, meaning that payouts are made once they become available to the merchant or according to a specific schedule (e.g. weekly or monthly), or initiated manually. Manual payouts allow merchants to choose how much should be transferred to their bank account at a time of their choosing. This is part of the settlement process.
The length of time it takes for a payout to be received depends on the payment method, but is typically a few days for card payouts and bank transfers. Some PSPs also offer the option for instant payouts, with these payouts typically taking half an hour or less. Instant payouts may be subject to additional fees, e.g. PayPal charges a 1.75% fee (up to USD 25) when using the instant payout method in conjunction with a Visa card.
Payouts are used for a variety of reasons. Some common ones include:
- To pay out winnings to users of gambling sites or other platforms where participants can win monetary prizes.
- To pay out earnings to sellers on a marketplace. In this case, the marketplace receives funds from end customers and typically takes a percentage share. The remaining amount then needs to be paid out to the seller. These payouts can be on-demand after reaching a certain threshold, or automated to take place on a regular basis (e.g. once a month).
- To pay out commission to marketing affiliates, who receive a share of the revenue they generate for the merchant.
- To pay earnings to freelancers and participants in the gig economy, e.g. food delivery drivers. These platforms need to be able to accept payments from end customers and then calculate and pay out the amount due to their partners.
- To pay salaries to a company’s workforce on a regular basis, typically in bulk.
Payouts can be automated or made on-demand, and on-demand payouts may require the recipient to have surpassed a certain earnings threshold. Payouts can be made using a range of methods from digital wallets to bank transfers, catering to the needs of the recipients and local market preferences.
Bulk, batch or mass payouts refer to the process of paying a large number of recipients at the same time. Bulk payouts are used to transfer funds to freelancers, affiliates, suppliers and smaller merchants, such as those operating on marketplaces. For example, earnings may be paid out to all recipients at the end of the month and vary over time.
As well as paying out earnings, mass payouts can be part of the payroll process for employees. In contrast to earnings, salaries are typically fixed, meaning the amount paid out to recipients does not fluctuate.
Automating this process via a mass payout system reduces administrative overhead and can reduce associated fees, including any currency conversion fees. Using a mass payment system also simplifies the process of payouts across multiple geographic regions, with a single system being used for all payouts.