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Collection and disbursal of payments are some of the most important parts of running a business.
Payments are ideally linked to a buyer wherein they pay for a product or a service they purchase or avail. Meanwhile, payouts are disbursals made by an organisation/business to pay its employees, vendors, service providers, etc.
For instance, a leading delivery service provider may use a Payment service provider like Cashfree Payments to pay wages/incentives to its delivery partners.
In this blog, we’ll go a little deeper to explain what payouts are, its features and advantages, how it works in an ideal scenario, and also explore examples.
So, let’s get started.
What Does Payout Mean?
In a layman’s language, payout refers to the concept of sending money to someone in lieu of services availed. As stated before, payouts could be disbursing employee salaries, pensions, loan interest, process refunds, freelance incomes, etc.
Payment service providers, such as Cashfree Payments, offer a robust payment disbursal solution that enables you to carry out payouts quickly, easily, and without any hassle. It also eliminates the need to upload complex excel files (as required when making disbursals via a traditional bank portal) to make bulk payments.
In fact, you can simply leverage Payout APIs and make single or bulk payouts in a matter of seconds.
- Send payouts round-the-clock to customers/vendors/service providers
- Leverage multiple payout methods including
- IMPS, NEFT or UPI
- Wallets – Paytm & Amazon Pay
- Debit and credit card
- Native wallets
- Easily control, analyse, track, and automate all aspects of your business payouts in real-time
- Make bulk payouts with utmost ease
Types of Payout Service Providers
Two types of payout service providers operate in the Indian payments industry today – the modern players and the legacy bank systems.
Here’s a table of difference between the two types of payout service providers.
| Modern Payout Service Provider | Legacy Bank Systems | |
| Account Activation | 100% onboarding using KYC verificationDedicated account manager | Offline onboarding processTedious paper trails including KYC verification |
| System Requirement | Work on all browsers and OS systems | May not work on all modern OS versions. Some banks are still working on legacy OS systems |
| Modes Of Payments | Support almost all types of payment modes including UPI, wallets, card transfers alongside IMPS, NEFT and RTGS | Only IMPS, NEFT and RTGS are supported |
| Availability | Available 24×7, even on bank holidays | Transactions can only be requested and processed on bank working days |
| Adding Beneficiary | Very easy to add beneficiaries | Adding beneficiaries takes time and efforts, and even visits to the branch sometimes |
| Automation | Highly automated process with API support giving users complete control of their payout needs | Partially automated process with no API help to process bilk payouts |
| International Payments | Supports mass transfers from India to another country. The purpose of the transaction must be known while setting up the account. | support only domestic transactions for bulk transfers. |
| Speed Of Transfer | Make instant payouts 24×7 even after banking hours | Make payouts only during the banking hours and bank working days |
| Handling transaction failures & reversals | Very easy to handle transactions, view failures, and make payment reversals | Highly complicated process that demands too many steps to follow. More tedious in the case of bulk transfers |
Use Cases and Examples of Payouts
Vendor Payouts – Payments made to a vendor by a business against goods or services purchased or availed. For instance, XYZ Ventures pays INR 20,000/- to ABC Logistics for shipping its materials across the country every month.
Partner Payouts – When a business pays certain commission to another business for helping them cross-selling their products or services. For instance, XYZ Ventures pays 2% commission to GHK Apparels on every item they cross-sell and help increase the former’s revenue.
Employee payouts – When a business pays its employees for their services. For instance, XYZ Ventures processes the salaries of its employees on the last day of every month for the services they’ve rendered.
Customer payouts – When a business pays back a certain amount of money to its customers as a gesture of gratitude or in the form of redressal. For instance, giving cashbacks or reward points to customers on every purchase they make or processing refunds against customer complaints or issues raised.
Features Of A Modern Payout Service Provider
Listed below are some key features of a modern payout service provider.
Offers An Integrated Payment Platform
The first thing to consider when looking for a payouts processing partner is its ability to integrate with other business tools. While an integrated payment platform may make it easier to process disbursals, when paired with other features, it brings many more benefits to the table.
For instance, with such a platform, reconcile accounts in real-time, process bulk payouts in one go, do micro and macro level analysis and so on.
Offers Multiple Payout Channels
Multiple payout channels let you make disbursals to beneficiary’s preferred accounts. For instance, if a vendor wants their payouts to be made in their wallet, then the platform should offer that capability to you.
Multi-channel payout facility also allows you to analyse the performance of these different payment avenues and broaden your payout horizons.
To give you an example, Cashfree Payments lets you make payouts via multiple payout methods, beyond just bank transfers.
- IMPS, NEFT or UPI
- Wallets – Paytm & Amazon Pay
- Debit and credit card
- Native wallets
Ensures Cost Effectiveness
Every payout service provider in India has its own range of charges for process disbursals. It’s important to do your research and choose a service provider that not only offers the best services but is cost effective as well.
After all, it is not feasible to partner with a payout partner that levies hefty charges and at the end of the day, puts a hole in your pocket.
Provides Powerful Data Analytics
Payout data analytics is another feature that you should look for when choosing a payout service provider. Just like payments, it’s equally important to track your payouts, ensure quick and proper disbursals, evaluate transaction failures and so on.
So, find a service provider that provides you with such a capability.
Cashfree Payments helps you track your outgoing transactions and even allows you to reconcile accounts in real time. Moreover, you can generate custom business reports, gain insights about transfers, check statements, reversed transfers, and much more within the Cashfree Dashboard.
Check For Simplicity
Simplicity is what matters the most. Make sure to use a platform that
- Is highly user-friendly and easy to navigate around
- Gives you the leverage to easily to integrate external business tools
- Adaptable when processing payments across various environments
Meanwhile, the platform must also give you the space to grow. Meaning, as your company grows and so does your level of transaction and other payment-related activities, the platform should grow and mature as well.
Must Comply With Necessary Digital Security Measures
Last but not least, ensure that the platform you plan to partner with complies with all the necessary security measures.
Make sure that they are Payment Card Industry Data Security Standard (PCI DSS) compliant. This compliance ensures that all your payouts are processed via secure, encrypted channels and keeps the financial data of your customers safe at all times.
Transport Layer Security (TLS) and card tokenization are other security features that you should look for when finalising a payout service provider.
Introducing Payouts By Cashfree Payments
Payouts by Cashfree Payments is a unique and robust disbursal system backed by powerful APIs that help make payments simple and seamless. You can pay vendors, enable customer refunds, disburse loans, and much more instantly 24×7, even on a bank holiday.
Additionally, the entire payment process is so simple that even a 10 year old kid can easily understand and make disbursals without any help.
Here’s an overview of the Payouts payment workflow.
Advantages Of Using a Automated Payouts Platform
Listed below are some of the benefits that you can reap with an automated payouts platform, like Cashfree Payments.
Built For Higher Success Rates And Automation
With Payout platforms, you can leverage direct integration with multiple bank partners and a robust payment ecosystem that assures scalability and reliability. Cashfree Payments takes care of bank onboarding, negotiations, compliances, and much more so that you can focus on running your business smoothly.
Intelligent Reconciliation
Unlike legacy systems, you can achieve up to 100% reconciliation with powerful Payout platforms. Be it transfers, failures, reconciliation or reversals, you automate entire processes. Eliminate manual reconciliation process across multiple transfer modes, destination banks and reporting formats, and more.
Easy-to-integrate Robust APIs
Another advantage of using tech-first platforms is that it enables you to go-live within minutes. You can simply integrate REST APIs by following simple steps and start disbursing payments almost instantly.
Make Quick Transfers Without Any Codes
Easily and quickly make single payouts using the Quick Transfer feature. In fact, with Cashfree Payments, you can process bulk payouts (almost up to 10,000 disbursals) by just uploading an excel sheet containing beneficiary details. It’s that simple and awesome.
Risk Mitigation
You can also leverage the risk mitigation feature to set daily transaction limits. This helps maintain API level security checks and also helps detect fraudulent activities.
Data Security
Payouts platforms like Cashfree Payments are PCI-DSS Compliant and ISO/IEC 27001:3013 certified. Our Payouts feature ensures that all transactions are done in an encrypted manner so that there’s no data leakage at any given level.
Instant refunds for COD orders with Cashgram
Cashgram is a highly sophisticated tool that helps manage and process refunds. It’s basically a payout link that you can use to send to customers whose bank details are not registered in your system. The link helps collate information you need and process refunds instantly. It makes payouts smooth, user-friendly, and accurate.
International Transfers
Besides making domestic payments, Payout platforms gives you the edge to make transfers from India to other countries as well.
How Does Payouts Work?
Here’s a step by step guide of how Payout works.
Step 1: Link Your Bank Account To Cashfree Payments’ Payout Account
- Sign up on Cashfree Payments
- Login to the merchant dashboard and request for Payouts Account activation
- Once the account is activated, link your bank account(s) with the Payouts Account
Click here to know more about how to link your bank account with Cashfree Payments’ Payouts.
Step 2: Add beneficiary
- Go to the Dashboard > Beneficiaries > Add Beneficiary
- Add the necessary details and get instant validation message
- You can also make batch uploads in case of large number of beneficiary addition
Click here to know more about beneficiary addition and other related information
Step 3: Start Making Payouts
- Once you’ve added a beneficiary, go to Payouts Dashboard > Transfers > click Quick Transfer.
- Select the beneficiary ID and other necessary details and start disbursing funds
As mentioned above, Cashfree Payments gives you the leverage to make payouts via multiple payment modes including IMPS, NEFT, UPI VPA, and digital wallets(Amazon Pay & Paytm).
Step 4: Get Notified And Automate Reconciliation
Get notified about your payouts via email or web-hooks and easily track your payout requests. You can also use the merchant dashboard to view detailed payout reports for your internal business analysis.
Wrapping It Up…
Over the last half a decade, payouts have turned into a reliable payment method for a major chunk of Indian businesses today. Payout gives them the option to make disbursals anytime, to any payment source and to hundreds of people at the same time.
Sounds useful?
Contact our Payouts experts today!
Frequently Asked Questions
What are weekly payouts?
As the name suggests, weekly payouts refer to payment disbursals that are made on a weekly basis. For instance, a delivery company makes weekly salary payouts to its delivery partners.
What are direct payouts?
Direct payouts means sending money to a person or an organisation directly into their bank account.
What is a payout balance?
Payout balance refers to the balance in one’s payout account. For instance, ABC Ventures has INR 2 lacs in their Cashfree Payouts account.
ABC Ventures can use this balance to make payouts to its vendors whenever they want, till the balance runs out.
What is another word for payouts?
Another term for payouts is bulk payment or disbursals.
How long do payouts take to process?
Payouts made via modern payout service providers like Cashfree Payments are processed instantly. You can also make bulk payouts to up to 10,000 people within a matter of seconds. Meanwhile, the same process takes time when done via legacy bank systems. Ideally, it can take up to 1 to 2 business days to process payouts in this case.
