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Article 14 Oct 2022

How Instant Payouts can reduce your costs by up to 90% and radically improve customer experience

Learn how Instant Payouts powered by Open Banking APIs finally solve the problem of getting money to customers and partners faster, and how this can reduce costs, by up to 90%.

Few things are more important to customers than receiving funds they are owed, without delay. Getting paid or refunded feels like a consumer right, and it can elicit strong emotional responses from those who are kept waiting for no good reason.

Yet, across industries and verticals merchants are failing to deliver on this expectation:

  • 60% –  of insurance customers are dissatisfied with settlement speed issues (Source : Accenture, 2022).
  • 3x – is the extra amount of time it takes freelancers to get paid vs contracted staff (Source: Sonovate & Fintech Global, 2022)
  • 64% – of online shoppers do not return to shop at a merchant following a poor returns and refund experience (Source: ZigZag Global Retail Returns Study, 2022) 
  • 83% – of customers reported losing money due to travel delays and cancellations and this summer, without immediate compensation (Source : Forbes, 2022)

Barriers to change

The most common factors driving poor payout and settlement experiences are manual processes, unnecessary middlemen and legacy technology. But there is one more. Many businesses have been slow to improve the payout customer experience because their profitability has not been at risk. A typical insurance payout is still processed as a batch payment. Individual customers are often left waiting for days or even weeks to receive their funds for low risk claims – like canceled flights, train journeys or straightforward home insurance payouts – when these could take a matter of seconds. This explains why only 1 in 5 customers in Germany, France, Germany, Italy, UK and Switzerland consider insurers to be trustworthy. But with the arrival of a new breed of Insurtech players offering a much faster digital experience, this is beginning to force a change. Although at nowhere near the speed many consumers had hoped. 

The same goes for e-commerce returns. Funds are often refunded via the payment method used to purchase the goods or services. For customers who paid by credit card, which account for 25% of online purchases in Europe, funds flow back from the merchants account via their PSP and the card issuer, before being booked back to their account. Meanwhile the merchant is charged a transaction fee and does not recoup the interchange fee charged for the initial payment. The only winners are the card schemes. Merchants still suffer unnecessary operational costs by having to manually settle and book refunds. 

Faster, fraud free payouts

Open Banking APIs change the game. By cutting out the middlemen, payouts happen in real-time with little to no fraud or compliance risk. In fact, Open Banking Account-to-Account (A2A) payments carry no chargeback risks. They remove Card Not Present (CNP) fraud; the single largest source of online fraud. Because A2A transactions are all subject to Secure Customer Authentication (SCA) and real time Anti-Money Laundering (AML) checks, it doesn’t get much safer for merchants and customers. 

Merchants also benefit from a streamlined back-office payout process. This in contrast to the massive investments that many businesses make to process manual batch payments and reconciliations. And that’s before we come to the effort involved when identifying, recalling and manually correcting payout errors. These arise through human error when inputting long string bank account numbers and sorts codes. Even merchants with a low error rate can quickly experience operational costs that spiral into the tens of millions per annum.

Turn instant payouts into a competitive advantage

Instant payouts are a possibility to reduce cost and a lever for improving customer satisfaction, retention and repeat buying. But what are the specific benefits per vertical?

Vertical nameBenefits of Brite Instant PayoutsBenefits of Brite Instant PayoutsBenefits of Brite Instant Payouts
InsuranceGenerate greater trust, transparency and predictability with payouts in a vertical defined by the belief that insurers won’t honour the policy.A better payout experience translates into a huge competitive advantage in a sector known to be slow at settling insurance claims.Improved NPS and customer loyalty that translates into more policy renewals, cross sell and upsell to higher value policies e.g. life insurance, home insurance
E-commerceMake refunds as easy as returns. 80% of online shoppers expect to return items free of hassle, but over 60% are disappointed by how long it takes for funds to hit their account. Give high value customers improved cash flow to make additional purchases. Customers spend 20% more when they know instant refunds are on offer.Reduce the volume of customer complaints arising from slow refunds. Instead improve NPS and customer advocacy with instant payouts.
Freelancer & Gig platforms Attract the best partners to your platform by guaranteeing payouts once a job is delivered. A huge competitive advantage. Retain partners by keeping up your end of the bargain – instant pay for a job well done.Reduce the costs of managing payouts to multiple parties by eliminating expensive manual processes
TravelReduce the cost of managing batch payouts for lower ticket items subject to a standardized refund policy (e.g delays)Promote greater trust and perceived fairness by meeting customers refund expectations Reduce error rate on refunds saving millions on operational costs per annum, and reduce the opportunity cost of human error. 
Online Trading & Crypto PlatformsSteal a march on your competitors by giving customers access to their winnings in real-time.Drive reinvestment and repurchasing power in your platform in the form of higher and more frequent deposits.A better payout experience translates into a huge competitive advantage in a sector driven by high velocity payins and withdrawals.

Reduce your costs with Brite Instant Payouts

We have understood why many industries have been slow to adopt instant payouts. Barriers continue to stand in the way of better customer experiences and lower costs for merchants. We have also learnt how instant payouts can become a source of competitive advantage across a range of verticals. The number of Open Banking users in Europe will exceed 60 million in 2024, from just 12 million in 2020, so now is the time to act. 

Brite’s products are built on dedicated Open Banking APIs, meaning that we offer the most reliable, secure and compliant way of dealing with payouts on the market. Access 335m customers in Europe, across 21 countries and 3800 bank connections. What’s more, in DACH consumers are able to receive payouts in a frictionless and smooth way as Brite disburses their funds to the same bank account used to make the initial payment with SOFORT, one the regions favourite online payment methods.

Interested? Let’s talk.