Adyen for Platforms — Part 4 of 4
Getting funds to users with fast, reliable payouts
In this guide, you’ll learn:
How to choose the right payout schedule
Tips for offering the best payout methods
How to be ready for cross-border payouts
Best practices for blocking payouts to malicious users
Pay users on time and they’ll stay loyal longer
If there’s one moment in the money flow that platform businesses shouldn’t get wrong, it’s payouts. You can have the most amazing onboarding process, offer great support, but if you’re messing with users’ cash flow, they’ll drop your platform faster than you can say “payment sent.”
of small businesses say cash flow has been a problem
reason for cash flow issues is not getting paid according to payments terms
of all payments are late to small businesses
Like everything else related to platforms, you have options when it comes to payouts. The first step is to acknowledge that deals being done and goods or services trading hands is only half the equation. Getting funds to users is just as important as facilitating commerce.
The trick is to design a payout system that meets your users’ needs while also managing risk and supporting your growth. Only then can you turn payouts into a serious competitive advantage, building trust with users and making your platform indispensable to their business.
In part four, we share how to join the dots to build an optimized payouts system – from key considerations for delivering reliable, timely payouts to user experience must-haves.
Choosing the right payout schedule
Getting paid should feel seamless from a user’s perspective and easy to manage from yours. Of course, there are plenty of details to figure out before getting to that point, like establishing how frequently to pay out your users (known as a payout schedule).
To determine which schedule is best for your platform, we recommend looking at two things: Your relationship with your users and their business model. Once defined, you can then decide whether a scheduled, on-demand, or express schedule most closely aligns with your needs.
Why is it critical to choose the right payout schedule? Because it can either act as a competitive advantage, enabling your platform to provide a higher level of service, or as a point of friction with users, impacting one of the most important factors of their business (e.g. cash flow).
Payout schedules cheatsheet
Type | Details | Benefits | Example use case |
Scheduled | Lets you automatically pay out all available funds in an account holder's balance on a daily, weekly, or monthly schedule. |
| For users operating in-store, scheduled payouts are often a good match as sales are usually consistent and low risk (since services or goods are provided immediately). |
On-demand | Lets you manually decide how much and when to pay out to a user via API. |
| For users who present a higher risk, on-demand payouts work best because you can initiate payout when goods have been delivered or sent to a customer. Or, you might decide to not pay out the full balance to them, depending on their risk profile or newness to your platform. |
Express | Lets you get funds to users faster by paying out while funds are pending settlement. |
| For cash-flow dependent users like shift workers, express payouts are best because you can payout immediately after their shift is done, especially any tips. VIPs or top performing users also work well for an express schedule, since you want to provide the fastest form of payouts to build their loyalty. |
Offering the best payout methods
What’s nice about payouts is getting money to your users is much simpler than providing them with the payment methods they need at checkout. You have two options, transferring funds to a user’s bank account or to a card, and your users select which one they prefer at onboarding.
The downside is, you don’t have much control over the payout methods themselves, since they’re handled by banks and issuers. However, there are moments where you can influence the customer experience for the better – like helping money arrive more quickly. All you need is a little help from your payment service provider (PSP), such as the Adyen accelerations below.
Payout methods at a glance
Bank account
- Most common and cost-effective payout method.
- Offers a normal processing time between 1-2 days.
ADYEN ACCELERATION
Same day payouts
Deliver funds to a user’s bank account on the same day by leveraging payout rails (e.g. same day ACH in the US and FPS in the UK).
Debit card
- Fastest payout method.
- Offers a processing time of <30 mins (depending on issuer).
- No dependency on bank cut offs (e.g. paying out on a Saturday).
ADYEN ACCELERATION
Instant payouts
Deliver funds in less than five minutes with Visa's "Visa Direct" and Mastercard's "Moneysend" products.
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Although both payout methods are reliable and secure, they can create inconsistencies in the payout experience. For example, transferring funds to a user’s existing bank account can take longer than promised, due to reliance on third parties with different cutoffs and settlement times.
Enter card issuing for end-to-end payouts control
As more and more platforms accelerate their payout methods with optimizations like the ones above, forward-thinking or innovative ones are going a step further to own the entire payout experience. And many are realizing one of the best options is to launch their own card program.
Why? Imagine that your platform is a popular marketplace for rare book lovers. Thousands of users and customers connect on your site every day to browse, sell, and buy. Since you have your own card program, every new user gets a branded card at sign up. As soon as they make a sale, funds are sent immediately to their platform-issued card. No waiting, no worrying, just available money that they can spend to grow their business or pay their bills.
4 ways having a card program makes your platform’s payouts better:
Better control over the end-to-end payouts process.
Helps reduce your reliance on third parties.
Expands your service offering to build brand loyalty.
Gives you the ability to unlock new revenue streams.
Issue your own physical or virtual branded card to optimize cash flow and build better user experiences with Adyen for Platforms.
Being ready for cross-border payouts
If there’s one thing global marketplaces like Etsy and Amazon have taught consumers to expect, it’s seamless cross-border commerce. But users have expectations, too, especially when it’s time to get their funds paid out to their bank account or card.
Global cross-border ecommerce grew 21% in 2020
If your platform operates in multiple countries or you plan to do so in the future, it’s important to create a payouts setup that lets you pay users in their local currency. Users don’t want to have to deal with foreign exchanges (FX) and expect you, as the platform, to provide this service.
The challenge with cross-border payouts is that they can be time intensive, complex, and expensive to set up. As you scale to new regions and markets, each one will require new local entities and licenses – which can seriously slow down your growth plans if you try to tackle them yourself.
This is another instance where having a knowledgeable payments partner can help. Be sure to choose one who leverages their global entities and licenses to help you quickly expand to new regions, while maintaining a localized and optimized experience for both users and customers.
You acquire funds from the Polish customer in PLN via Adyen’s European acquiring connection.
Once funds are settled, Adyen initiates the foreign exchange (FX) from PLN to USD, as well as the cash management, moving funds from Europe to the US on your behalf.
Your marketplace pays out the American user in USD via the domestic banking connection (ACH).
Since the entire process is optimized for speed, simplicity, cost, and localization, both user and customer walk away satisfied with their experiences.
Set up cross-border payouts with the flip of a switch. Adyen's extensive global coverage helps you pay users in the currency they want.
Blocking payouts to malicious users
Whenever there’s money going in or out of a business, you have to think about risk. All brands that process transactions must address fraud at checkout. But because platforms are multi-party businesses, they must also manage two additional layers of risk when onboarding new users and paying out to users.
6 ways malicious users can misuse your platform
Committing collusion
Involvement in fraud rings
Taking over account
Committing scams
Laundering money
Synthetic fraud
The last thing you want is for your platform to inadvertently fund illegal activities by accidentally sending money to malicious users. The good news is your payouts can double as a useful tool for defending against these fraudsters – if you have a strong risk management system in place.
By strong, we mean having the ability to spot and block fraudsters before payout, as well as adapting to their new strategies and behaviors as they evolve. These platform risk needs cannot be met by traditional risk prevention tactics, but they can be addressed by smarter payout risk tooling.
Traditional payout risk tooling
- Reliant on platform’s data and tools
- High dependency on human intervention
- Very expensive to build and maintain
- Creates operational pain points
Smarter payout risk tooling
- Uses proprietary machine learning algorithms
- Global and industry-wide view
- Plug and play (no technical integrations required)
- Automation and alerts drastically reduce manual reviews
Defend against malicious users through a combination of machine learning and network analysis that assigns each user a risk score with our risk tool, Score.
Making payments core to your platform business
A guide to owning the experience from end to end
Part 4
Getting funds to users with fast, reliable payouts
Leading platforms and marketplaces like eBay, Wix, GoFundMe, and SeatGeek use Adyen to accept payments across channels at scale and stay competitive as they move into new markets and regions. To learn more about how our single global platform can help your business offer a best-in-class payment solution, check out Adyen for Platforms or reach out to our team.