Payouts are one of the most underappreciated and untapped parts of the payment journey. Many businesses need a mechanism to send money to their customers, whether it’s their winnings, investment earnings or successful insurance claims. Equally, marketplaces and gig-economy businesses need to pay vendors, drivers and riders. But payouts are — all too often — slow to settle, costly and prone to failing.
So why do entire industries settle for a poor payout experience? Could it be because we think manual, error-prone payouts are the only option? The good news is they aren't. Instant payouts could be the ideal solution for both merchants and their customers.
As the name suggests, instant payouts settle in real-time. That means your customers or vendors can access their money straight away, helping your business build trust, reduce churn and differentiate yourself from your competitors. Instant payout providers — including TrueLayer — also make payouts automated, helping cut the manual admin needed to manage payouts, as well as increasing the likelihood the payout will be successful.
We’ve compiled a list of eight industries that can transform their approach with instant, automated payouts:
1. iGaming providers
iGaming businesses, like online casinos and sports betting platforms, have seen consistent growth in recent years, with an expected European CAGR of over 9% from 2023-2028. But the cost of acquisition is high, and operators need to find new and innovative ways to win and maintain player loyalty.
Instant payouts — known in the industry as instant withdrawals — are one such differentiator. 55% of all players are likely to switch to an online gaming service that offers instant withdrawals. In short, players don’t want to wait to access their winnings.
Traditional payouts pose a serious problem to this aim, as card-initiated payouts and manual bank transfers (such as Bacs in the UK or SEPA Credit Transfer in Europe) can take up to five days to land in your customer’s account. That could be the difference between a customer choosing your business over your competitors’.
2. Insurance providers
The insurance industry is another industry where it can feel difficult to stand out from the competition, especially at a time when potential customers have more choice and are savvier than ever before.
Instant payouts give insurance providers an additional selling point ahead of their competitors, many of whom will still be hamstrung by slow legacy systems. And when combined with automation, instant payouts will not only reduce the time and effort spent manually reconciling payments but also reduce the likelihood of customer complaints caused by manual error.
3. Trading and investing
As more Millennials turn to online trading and investing, providers will likely have to fight harder for loyalty. Millennials are digital natives with high expectations of a frictionless user experience and no qualms about moving to a better provider.
And like with iGaming, trading and investing platforms serve customers who actively expect instant withdrawals from the investing experience.
Almost half of current investors (46%) would be likely to switch providers if the new platform offered instant withdrawals. And not only would investors be more likely to choose your platform should you offer instant withdrawals, they’re more likely to deposit more. More than one-third of current investors (37%) would consider investing more, given the ability to withdraw their funds instantly.
Similar to the insurance industry, businesses in the lending space need to differentiate themselves from their competitors. According to Shawbrook Bank, 28% of UK borrowers identified ‘ease and convenience’ as an important factor when deciding on which lender to use. And the ability to access the cash they have borrowed quickly and easily is a big part of that convenience.
Automated payouts also allow lenders to smarten up their back-office operations, by reducing operational costs associated with having to manually track, initiate or reconcile payouts to borrowers.
For retail brands, easy and speedy refunds have almost become table stakes, with 81% of shoppers now expecting a refund in a week or less. 67% of shoppers say the time taken to receive a refund is an important factor when choosing which brands to buy from (and it rises to 90% for purchases between £500 and £1,000).
With refunds from car purchases, there is a high level of financial anxiety – you’d be anxious if you didn’t get £15,000 back in your bank account right away, so the ability to return that money in a really quick, transparent and frictionless way is an amazing customer experience.
Boaz Valkin, ex-Head of Product, Cazoo
In retail, card payments are the norm, with both high operational costs and slow settlement speed. Instant payouts, those which bypass card networks altogether, could offer a way for retailers to both build customer loyalty and keep costs down.
While the industries we’ve already discussed involve paying out money to consumers, marketplaces will also benefit from the ability to offer instant payouts to vendors. For most marketplaces, vendors are small businesses. Small and medium businesses (SMBs) are always attuned to the speed with which their money moves, and cash flow challenges undermining the growth and operations of at least nine out of ten small businesses in the UK.
Coupled with the ongoing cost of living crisis, keenly felt in the UK and Europe, SMBs will readily look for alternatives that provide them with more instant access to their funds. With that in mind, instant payouts give marketplaces a competitive edge and can allow them to attract high quality vendors.
The UK proptech industry saw record levels of investment in 2021. Like so many other industries, that positive growth also saw an increase in competition. Instant payouts are a strong point of differentiation for proptech brands hoping to win and retain landlords that are typically spoilt for choice.
8. Gig economy
Payouts are a cause of concern both for the business and the gig worker. 85% of gig workers would work more if they were paid faster, but freelancers have to wait three times as long to get paid as salaried staff. Gig economy businesses that are slow to pay workers risk seeing them churn to competition.
Offering instant payouts gives brands the ability to retain existing workers, while attracting further high-quality workers to their platform at the same time. It also helps reduce operational costs associated with sending payouts to so many different parties.
Bonus: international brands
Regardless of the industry your business operates in, the need to integrate, maintain and reconcile payouts across different providers in different geographies is inefficient and costly for any brand operating in multiple European markets. Finding an instant payout option that covers the markets you operate in can significantly reduce operational costs and speed up the integration process.
The TrueLayer payouts solution
Using the fastest payments rails across the UK and EU, Payouts from TrueLayer settle right away with 99.9%+ success rates. Ditch messy CSVs and manual payout-tracking processes and automate paying out at scale via simple API calls. Cut operational costs, optimise for success and spend more time focusing on delivering the best customer experience possible.
Talk to one of our payment experts about how Payouts could benefit your business.