Global mass payouts: The top 7 problems faced and how to solve them

November 9, 2020
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Viktorija Ivanova. Account Management Team Lead at ECOMMPAY
Viktorija Ivanova
Account Management Team Lead

If your company makes mass payouts, you have likely faced several problems with the process. These issues often include technical failures, unnecessary and unwanted costs, and transaction delays.

So how can you eliminate and avoid these problems, enabling your business to run more smoothly, and without unnecessary headaches?

Problem 1: The payment process fails because the payment system rejects it.

Often, payments are correctly initiated by a merchant, but the payment system is unable to process them.

Solution. Using cascading technology, if payouts are declined, they are automatically redirected through backup payment gateways.

Example. Perhaps an online platform that offers English language courses wants to make a payment to one of their teachers. The payment request is sent to the N1 payment gateway but is rejected. The request is then sent to gateway N2, where it is also rejected due to an internal system error. Since the payment request was rejected at the second step too, it is now sent to a third gateway (N3), where the payment is finally successful. The cascading process is thus over. Thanks to cascading and other technologies, as well as the thorough work of experts, payments are successful in 99.9% of cases, giving your business peace of mind.

Problem 2: Financial losses on bank commissions.

Solution. Netting is a special solution for online businesses operating payouts in different countries, with differing local currencies. To reduce commission costs, both local and national processing should be utilized.

Local processing is needed to cover costs in the local currency, avoiding unnecessary currency conversion rates and unnecessary cross-border payments.

To reduce costs associated with commissions, both local and national processing should be used:

Example 1. A European taxi-aggregator working in Ukraine pays drivers in Hryvnia. Payments are made from a local bank account through the ECOMMPAY payment gateway. The same account receives payments made by passengers. The transport company’s profits are converted and then sent through the same payment gateway, in Euro, to their Euro account.

Example 2. The main currencies a business operates with are the Euro and the Dollar. To reduce the financial costs associated with conversion, the payout currency must match the currency of the recipient's card.

If, for example, an online business works with Polish customers using Zloty, it will be more efficient to use the local currency payout channel. Our advice to you, therefore, is to choose a payment provider that is already operating in the market that you are interested in and offers local payout methods.

Problem 3: Payouts to only Visa and Mastercard are not enough. Customers want to get paid in various different ways.

Solution. The answer is simple: choose a payment provider that allows you to make payouts to many alternative payment systems.

Not every alternative payment system offers payout schemes. In Europe, for instance, working with Trustly, PayPal, or Skrill, may well be enough.

However, if a business needs to connect several payment methods, it is better to choose one payment provider, which offers all the payouts schemes you need. In this case, it is possible to connect them through a single integration, such as ECCOMPAY. A single client interface makes it possible to monitor transaction flows as well as analyse varying payment scenarios.

Problem 4: The long process of payouts.

Solution. Individual payout schemes. Both direct payout schemes and alternative ones are used, with Visa and Mastercard being the most frequently used. International payment systems make payouts using Visa Direct and MoneySend. But it is worth mentioning that not every payment provider has access to these services.

Visa Direct and MoneySend require fast-funds enabled issuers to make funds available to cardholders' accounts within a maximum of 30 minutes after the transaction is approved. Basically, payouts in this case are made within minutes, not days, regardless of the cardholder's currency. Additional speed is provided by a streamlined replenishment process for the respective payout balances.

One more thing that is essential when making mass payouts via Visa and Mastercard is to assign the correct MCC code (Merchant Category Code). In other words, it is necessary to correctly classify your business within the international payment systems. This is important because the international payment systems apply different rules and restrictions for different types of business. Incorrect classification may prevent mass payouts from being made.

Visa Direct and MoneySend payment schemes assign businesses an individual descriptor - a unique description that accompanies the payment. This way, the recipient is able to see from whom the payment came, and for what purpose.

Mass payouts can be made using the Mass Pay API function. It allows you to upload multiple payouts with one CSV file, combining different payment systems while observing the required parameters. It is only necessary to specify the amount and currency code. If the businesses wish so, this process can also include a transaction identifier as well as a message to recipients.

Problem 5: The payment fails because the recipient has entered incorrect bank card data.

Example A freelancer, filling out their bank details for payouts on a digital project platform, makes an error when submitting their bank card number, incorrectly specifying its expiration date or CVV code.

Solution. Zero authorization allows you to avoid confusion and wasted time from unnecessary clarification of details. When a user binds his card to the payout program on a website, the payment provider automatically sends a zero amount request to the individual’s issuing bank and checks the receiver’s account for validity. If the expiration date is wrong or the CVV data has been entered incorrectly, the cardholder is immediately notified without waiting for the first payment to be rejected.

Problem 6: Cash flow management causes loss of time and resources, plus lost conversions.

If your online business is connected to multiple payment providers, acquirers and payment methods, and also operates in different countries, it can significantly increase your associated costs for money transfer fees. In addition to this, coordinating all payment channels often requires the involvement of IT specialists, financiers, technical support staff and many other specialists. This represents huge resources and costs for online businesses.

Solution. Technohub is the unified infrastructure that allows merchants to manage all payment providers via just one client dashboard. In other words, if your business conducts mass payouts through many local acquirers and payment providers, you can manage all these channels in one dashboard window.

The system is flexible, automatically directing payments to the appropriate channels, and cascading through alternative routes in cases when the payment system fails. This ensures the maximum number of payments succeed, increases the value limit per recipient, and reduces financial costs.

Example. A merchant sends a request for payouts in currencies USD, EUR, and RUB to cards VISA, Mastercard, and Mir. The system dynamically calculates the optimal route for each payment based on geography, card type, currency, device type, channel availability, and other user-set parameters

Problem 7: Data security and technical failures.

A question that will never lose its relevance; how to ensure the security of storage and transmission of personal data?

Solution. Let's say that your business doesn’t have a PCI DSS user payment card data storage certificate, but pays money from customers to contractors. For this purpose, a token terminal is used. A token terminal is an online business software product that makes payments to users’ bank cards but can't collect and store users’ sensitive card data on its side.

A Token Terminal generates digital codes (tokens), which are associated with the bank card details of the user. The token does not contain sensitive data and can be stored without fear of breaches of the storage security standards. This reusable token is used until the expiration date of the token associated with the bank card.

So, we have touched upon the main problems of making mass payouts. These include large commission fees, technical failures, and the slow speed at which payouts are made. By solving these issues, you can better optimise the logistical and financial resources of your business. Furthermore, you will benefit from increases in the loyalty of your employees and freelancers as they will receive their payments on time.

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