Sometimes, businesses and government authorities need to make hundreds of daily payments. When done manually, it can take a lot of time and resources and this may cause errors and delays. Thus, a digital bulk payment solution becomes necessary when businesses need to pay such a massive number of payees flawlessly and efficiently.
In a study, over two-thirds (68%) of small businesses said they had to decrease their use of cash and checks for their B2B payment requirements. It’s because these methods were operationally inefficient, costly, and time-consuming. Speed, security, and transparency are the top priorities for companies, so they are likely to shift their payments to electronic and automated bulk payment systems.
What is Bulk Payment?
Bulk payment or wholesale payment is the process wherein a business makes a high volume of debit payments to multiple beneficiaries in one action. Despite being distributed among multiple recipients, a bulk transfer is listed as a single debit on a statement.
In the past, bulk transfers were carried out using paper checks. However, since digital payments have become the norm, advanced technological tools and platforms like APIs (Application Programming Interfaces), file exchange gateways, and file importers facilitate timely, efficient, and reliable bulk payments.
Difference between Bulk List, Batch Payment, and Bulk Payment
A bulk list is a pre-defined list of credit accounts or beneficiaries a company wants to pay using a single debit account.
A bulk payment is a simultaneous payment executed using the pre-specified bulk list, with the same currency, and through the same payment method.
A batch payment is a bunch of payments executed using multiple debit accounts. It may involve different execution dates, currencies, and payment methods.
Types of Bulk Payments and Different Ways to do It
There are mainly two types of wholesale payments:
Standard Domestic Bulk Payment
This type of transaction allows companies or individuals to make standard domestic remittances to multiple beneficiaries. Standard domestic bulk payments are further classified into three types from which a business can choose any depending on their needs:
- Immediate Bulk Payments (IBULK)
- Next-Day Bulk Payments (NBULK)
- Future Dated Bulk Payments (FBULK)
Bulk Inter Account Transfers (IAT)
Bulk Inter Account Transfers are essentially used for international bulk payments. It is widely used because its streamlined process makes it faster, more reliable, and more secure than other types.
Following are three commonly used bulk payment systems or ways to carry out bulk transfers:
Bank Transfers
Bank wire transfer is the most favored way of making bulk payments. It is preferred because of its low costs and quick turnaround times. In this bank-to-bank bulk transfer, money is directly deposited from the debtor’s account into the recipient’s bank account. The bulk payment systems based on bank transfers have different names depending on countries. Bulk bank transfers are called:
- ACH (Automated Clearing House) transactions in the US
- Faster Payments or BACS (Bankers' Automated Clearing System) in the UK
- SEPA (Single Euro Payments Area) Credit Transfers in the Eurozone
Bulk Payment Solutions
API-driven, customer-centric, and digital bulk payment solutions from third-party payment aggregators also provide means for making bulk payments. This method is famous for making international bulk payments and payments to freelancers and contractors. The demand for bulk payment solutions is currently at its peak because the world is witnessing huge developments in the gig or sharing economy.
Card Payments
Although bulk payments through credit and debit cards are complicated, companies sometimes can make bulk transfers directly to the creditor’s bank card. Bulk card payments usually are only used for refunds because the amount a merchant can send to the customer’s card cannot be greater than the amount the customer paid. Reimbursements make up a significant part of the bulk payment ecosystem.
Reasons Businesses Should Adopt Bulk Payment Solution
As businesses expand, they face numerous challenges. For companies operating across borders, managing payouts is a complex task. Enterprises and government agencies will need to pay a variety of vendors, contractors, and associates from different territories, in different currencies, probably with different due dates.
The accounting or finance team members cannot process these payments manually because of their sheer volume. Also, international transactions and domestic transactions with foreign currencies are expensive, because most of the time they have transaction fees attached.
Businesses can overcome these challenges by adopting an API-driven, advanced bulk payment solution. These solutions come with a bunch of functionalities that no bank offers. Apart from ordering, scheduling, and managing bulk payments/refunds, bulk payment solutions allow:
- Disbursement profiling for different groups of beneficiaries
- Maker-checker flow implementation
- Petty cash management
- Bulk airtime distribution
- Supply chain settlement
Following are different bulk payments that automated and digital bulk payment suites that can help simplify businesses:
- Employee Wage Payouts or Payroll
- Payouts to Contractors and Freelancers
- Bill Payments
- Bulk Airtime Disbursement
- Subsidy and Loan Distribution
- Refunds
- Dividends
- Referral Campaigns & Contest Vouchers
Launch Your Bulk Payment Suite Using Next-gen Digital Financial Platform
Over the past few years, the changes in market and technology have given birth to on-demand and gig economy models with complex payment needs. These models, where thousands of people work as independent contractors or freelancers, require frequent collection and distribution of money in mass amounts.
If a company is engaged in regular mass payouts in any form, partnering with a digital financial solution provider should be a matter of when not why. Seamless and faster bulk payments to employees, contractors, and clients will also make your business a more attractive option than your competitors.
Panamax’s MobiFin Elite provides a bulk payment solution with cutting-edge features that simplifies the end-to-end bulk payment lifecycle while ensuring security and speed.
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