A well-organized payment management system is like the heart and soul of a business. As a matter of fact, businesses operate with full dependency on the payment systems, whether it is collecting payments from their customers or making payments to their suppliers and employees. It is not a hidden fact that manual payout systems are extremely complicated and inefficient. And even the technology-driven payout systems can impose various challenges on businesses. Most of these payout challenges are related to transaction delays, technical failures and extra charges. In this article, we will discuss the common payout challenges and how you can deal with them. Let’s dive in!
Payout management is crucial for the smooth workflow of businesses.
What Are The Common Types of Payouts?
As you may already know, payouts are a type of payment that is made by the business owners to their suppliers, vendors, channel partners, employees, customers and other stakeholders. Below are the common types of payouts :
● Vendor payouts
These are the payouts made for products or services provided to the business by their suppliers and vendors.
● Partner payouts
Partner payouts are the commissions that are made to the business partners, retailers, distributors and others for cross-selling.
Employee payouts, as the name suggests, are made to the employees and workers of the business. These include salaries, reimbursements and wages.
Customer payouts include making mass payments to the customers in the form of cashbacks, refunds, rewards and vouchers, etc.
Utility Bill Payouts
Finally, utility bill payouts involve paying for utility bills incurred in the office or warehouses.
Common Payout Challenges Faced By Merchants
Payout problems can hinder the growth of any business.
Regardless of the size and type of your business, if you don’t have a reliable payout management system, you will have to deal with numerous challenges sooner or later. For instance, you might find yourself caught in a scenario where you have to make an urgent payment to a supplier late at night or on a bank holiday. In such situations, if you keep your partner waiting, you’re indirectly causing damage to your own reputation. This is just one example, there are many more challenges businesses have to face when it comes to making mass payouts.
Below are some of the common payout challenges :
1. No Instant Activation; Multi-step Process
The multi-step and complicated process is the first and perhaps the biggest challenge faced by merchants while making payouts. A complicated and lengthy payout procedure is not only time consuming but is also prone to errors and other issues. The good thing is, there are great payment gateways in India that offer instant activation, meaning you can make high-volume or bulk payments in a matter of minutes without any hassle.
2. Overwhelming Processing Fees
Processing fees are not always a challenge. In fact, it is totally fair and can be regarded as the price of doing business. However, when this processing fee adds up to a massive amount, it can become a real headache for businesses. Dealing with the additional “hidden” charges is one of the biggest payout processing challenges businesses have to struggle with.
The problem with transaction cost is that it isn’t constant. It varies depending on the payment methods and the size/volume of payout. Other factors on which the transaction fee is calculated to include the type of business, location, currency and so on. Although some charges can be avoided and negotiated, some can just can’t be avoided.
The best solution to overcome this challenge is finding the right payment service provider with competitive pricing as well as understanding how transaction fees work.
3. Lack of Automation
Let’s face it, in this era of digitalization, manual processing isn’t only inefficient but also imposes a variety of challenges. To begin with, manual payout processing is prone to errors, takes a lot of time and incurs hefty operational costs. The only solution to this problem is — Payout Automation!
By having a payment gateway that comes with advanced automation capabilities, you can set your payment processing environment to autopilot. In this way, you can save time, manpower, cost as well as resources.
4. Technical Failures
Technical failures are very common in payment management systems. They especially occur in the case of businesses that need to make large volumes of payouts on a regular basis. While all the payment gateways are prone to technical failure, the best ones offer exceptional technical assistance that don’t allow such failures to last for a long time. Hence, it is very necessary to work with a payment gateway service that offers reliable technical assistance 24*7.
5. Security Problems
There is one question that will never lose its significance no matter how advanced the payment processing system becomes — how to ensure data security during the payment processing?
Security problems in payment processing are very common and definitely a matter of concern. This aspect becomes even more important when talking about mass payouts where businesses need to pay a large number of recipients at the same time. At this time, it is the business’s responsibility to make sure all the sensitive data of involved parties is kept safe and secured during the digital transaction.
While most payment gateways offer security features like PCI-DSS compliance, SSL certification, data encryption, tokenization and fraud detection, the best ones have taken their security game up a level by incorporating a robust risk management system. All you need to do is find such payment gateways that provide you with a tightly secured environment to process your payouts.
6. Lack of Payment Modes for Payouts
Most of the time, the only option merchants have, to make payouts, is bank transfers, which is a time-consuming and cumbersome process. Incorporating a payment gateway is the best option as it offers multiple payment options like UPI, net banking, wallet, etc. that offer safe and speedy processing.
So, we have touched on all the main payout challenges businesses have to face due to the lack of proper payment processing infrastructure. These include technical failures, security issues, payment failures, high costs, etc. Talking about the solution, using a well-reputed, reliable and feature-rich payment gateway is the best way to overcome these payout challenges. This will not only make your payout processing seamless and convenient but also help you in gaining the loyalty and trust of your stakeholders.