A deep dive into instant payouts

What are instant payouts?

Instant payouts are a business feature that helps companies manage the movement of funds when payouts have to be made to suppliers, customers, or to other merchants. Even better, the instant payouts feature usually includes an end-to-end view of the funds. That means starting from received funds (settlements) until payments are sent (payouts), you’re always one step ahead.

Basically, a payout is an action of paying out to someone. Although payouts are technically the same as common money transfers, the difference is that a payout usually is associated with a business that needs to pay a participant already in its ecosystem. For example, when a marketplace or gateway like eBay needs to pay its merchants or sellers after a sale is completed.

Whenever a customer makes a purchase from a merchant via a marketplace or gateway, the marketplace or gateway will initially receive all the funds regarding the sale. Then, the marketplace will have to pay the merchants the proceeds of said sale. This regular payment is known as a payout or sometimes a settlement.

The same is true in the gig economy. Picture a ride-sharing platform that connects drivers and passengers, i.e., two separate participants in this business ecosystem or food chain. It’s the platform’s responsibility to collect funds from every passenger and make a payout to their drivers once the journey is complete. For their service, the platform will usually take a percentage, commission, or flat rate from that payment and will payout the rest to the driver.

While most payouts typically take several days to clear, instant payouts are usually complete in around 30 minutes. Even better, instant payouts with Fondy are made easier thanks to automation.

Instant payout automation means that the platform won’t have to manually initiate a payout every time they receive money from a transaction. As automation is configured at an account level, a payout will be triggered to the driver automatically.