To Build or to Partner? Navigating the Maze of Payouts Platforms

Imagine you're at the helm of a burgeoning online business. Your sales are off the charts, the customer base is growing by leaps and bounds, and your affiliate network spans the globe. Life is exhilarating — until it comes to sorting out your payouts. Now you have to figure out if it’s better to build your own payout platform or partner with an existing provider.

While both choices have pros and cons, partnering with an established payout provider is the easiest way to guarantee compliance, access local rails, and connect to banks worldwide without overwhelming your budget. Learn more about the best way to pay global affiliates here.

Building a Payout Platform: The Pros & Cons

Creating your own platform sounds appealing. It offers customization, complete control over your payouts, and a platform that seamlessly fits your unique needs. That’s why some major companies choose to create their own in-house payout platforms.

For example, Uber developed its own payout system to compensate its vast network of drivers. Or take Amazon, which built its proprietary payout system to handle the intricate web of transactions on its colossal platform.

However, chances are, your business isn’t Uber or Amazon. And even if it does someday grow to that scale, you’d be surprised by how flexible some third-party payout providers are when it comes to meeting your needs. Building your own payout platform requires enormous resources, both financial and timewise.

Here are a few of the most notable pros and cons of building your own payout platform:

Pros:

• Full Control: With your own payout platform, you call the shots. You decide the what, the how, and the when, which allows for a completely customized solution.
• Business Integration: An in-house platform is tailored to your business processes and can evolve seamlessly with them.

Cons:

• Cost and Time: Building an in-house solution is highly resource-consumptive. You'll need an expert team, months of development, testing, and continuous updates.
• Regulatory Compliance: Navigating international payment regulations can make anyone feel like they're in quicksand. It requires constant vigilance and adaptation to ensure global compliance.
• Customer Support: Handling payout issues and queries will be your responsibility. Are you ready for the commitment?

Partnering with a Payouts Provider: The Pros & Cons

On the flip side of the coin, you can partner with a provider. Payment providers facilitate mass payouts anywhere in the world, using any preferred payment method, on your behalf. That means you can pay international affiliates and other team members without setting up your own payment systems in-house.

Plenty of major brands rely on third-party payment providers. Shopify, for example, leverages Stripe to process payments for its ecommerce customers. Businesses worldwide rely on PayPal for global transactions. While you might have less control over your payout platform, working with a provider comes with fewer in-house resources, guaranteed compliance, and more customization than you might think.

Here are some key pros and cons of partnering with an independent payout provider.

Pros:

• Quick Setup & Scalability: You can hit the ground running with a ready-to-go, reliable platform and scale on demand.
• Compliance Sorted: Providers handle all the complex regulatory requirements, eliminating compliance headaches for you.
• Lower Costs: Compared to the potential cost of building and maintaining an internal system, partnering with a provider is often more economical.
• Customer Support: A good provider will offer top-notch customer support, saving you time and resources.

Cons:

• Not Unique to Your Business: While providers are improving on this front, there may still be constraints depending on your unique requirements.
• Revenue Share: Typically, providers take a small cut as part of their service fee. It's a minimal price to pay, but it does add up over time.

Other Considerations

When it comes to choosing between building your own payout platform and working with a payout provider, there is no universal “right” answer. It all comes down to what works best for your business, budget, and priorities. Building your own platform may give you more customization options, but partnering with a provider boosts security and compliance while helping you save resources.

Here are a few other considerations to help you choose the right payout solution for your business.

Security & Compliance

Digital security is a serious consideration when choosing — or building — your payout platform. The best payout providers offer multiple security measures, including data encryption and multi-factor authentication.

On top of that, meeting global compliance standards protects your business from fines and charges. It’s crucial to understand compliance wherever you send payments. As stated in the pros and cons above, this is one of the key advantages of partnering with a payout provider.

If you choose to build your own payout platform, ensuring security and compliance will require more resources in the form of research, fees, and time-consuming processes. If you don’t take the time to carefully develop both factors, you’re left with risks to both your payees and your business.

Access to Local Rails

Another advantage of partnering with an established payout provider is access to local bank rails. These days, there are plenty of ways to transfer money — but your affiliates might still prefer an old-fashioned bank transfer. Working with a payout provider gives you access to local rails around the world, meaning you can send them money via Global ACH or another transfer method.

To be clear, there is nothing wrong with digital transfer methods. But it can support your brand’s reputation and hiring pool to offer multiple secure options.

Navigating Your Way: Actionable Advice

Here's the real question: Does the thought of building a payout platform get your heart rate soaring with excitement, or is it causing a slight increase in your blood pressure? If it's the latter, then partnering is a no-brainer. If it’s the former, factor in the cons and look at the clock—remember, time is money.

Whatever your initial preference is, weigh the pros and cons based on your business size, growth rate, available resources, and long-term plans. When in doubt, consult with experts and do your due diligence. Efficiency in payouts can be a significant differentiator for your business, so this is not a decision to take lightly.

The final takeaway? Building your own payouts platform makes sense if you're a mammoth like Uber or Amazon with massive resources. However, for most businesses, especially growing ones, partnering offers much-appreciated simplicity, speed, and freedom to focus on core business aspects.