TL; DR
- Bulk payment is the process of bundling multiple payments into one transaction.
- The top three ways to make bulk payments are through payment service providers (PSPs), bank transfers, and card payments.
- Bulk payments can help businesses save time and cost, improve cash flow management, strengthen security, and simplify reconciliation processes.
Understanding bulk payments
Growing businesses will inevitably have to contend with a larger number of transactions. These include employee salaries, supplier payments, bonuses, working with contractors, or any tool/equipment upgrades to accommodate larger sales volumes.
Accordingly, keeping track of these payments and ensuring that they are paid on schedule without error will become increasingly difficult. Still, it is necessary if businesses are to continue operating.
But it does not have to be difficult at all.
Bulk payments can help fast-growing SMEs save both time and cost, improve cash flow management, reinforce security, and streamline reconciliation processes.
How bulk payments work
In a nutshell, bulk payments refer to the process of making multiple payments at once. It allows the payer to bundle multiple individual payments into one transaction either manually or through automated processes.
Bulk payments can go by different nomenclatures depending on where you are in the world. In the Eurozone, this form of payment is referred to as SEPA Credit Transfers; in the UK, it’s known as Faster Payments or BACS; and in the US, they are often synonymous with ACH (Automated Clearing House) Transfers.
Here are the three ways to make bulk payments:
1. Bank transfers
Bank transfers are one of the most common methods of making bulk transfers as most individuals and businesses have bank accounts. This is one of the cheapest, safest, and arguably the most reliable options as it is performed through banks.
However, bank transfers have their limitations that make it less than suitable for certain businesses. The biggest issue is customer support, which is typically limited to the bank's operating hours.
This makes bank transfers unsuitable for businesses which require access to payment services around the clock. Moreover, banks tend to have complicated uploading formats. This can be troublesome for businesses who may face payment delays if they upload data incorrectly.
2. Card payments
Cards are mainly used for refunds as it is how many businesses collect payments from their customers. This makes it much easier to send payments back to the originating account as the information is already available. Typically, this transaction can be completed almost instantaneously.
On the other hand, if the customer expects the refund in a different account, this will incur a wait time of anywhere between 4 to 7 business days as the bank conducts its verification processes. This may lead to a poor customer experience and erode customer loyalty in the long run. Also, these transactions come with a corresponding bank fee, which adds up over time.
3. Payment service providers (PSPs)
Payment service providers like Wallex allows businesses to make bulk transfers to both domestic and international counterparts. This is among the most efficient bulk transfer methods as it can be done in seconds online. On top of this, it also allows transactions in multiple currencies, thus eliminating the FX conversion costs.
Using PSPs to perform bulk transfers usually involves an associated fee, and in some instances, it may not be supported in certain countries. This can be a blocker for multi-national companies that need versatility.
Advantages of Bulk Payments for Businesses
The main use case for bulk payments is salary disbursements to local and overseas employees, processing invoices from contractors and freelancers, paying dividends to shareholders, direct debits to vendors, or making payments to contest winners.
Here’s why they are used so often:
Time and cost savings
Imagine a company that needs to make 100 payments to vendors every month. Performing each payment individually would be tedious and time-consuming. However, bulk payments allows them to enter all 100 payments at once and send them in a single transaction, freeing up time for higher value tasks.
Time and cost savings are the biggest benefits for businesses. It also drastically reduces the likelihood of manual errors, which is far more likely to happen when an individual has to repeat the same process multiple times consecutively. This translates into greater efficiency, timeliness of payments, customer satisfaction, and greater savings since fewer resources are required to complete the same number of payments.
Improved cash flow management
With bulk payments, businesses can schedule payments to be made on a specific date, thus ensuring that payments are made on time and reducing the risk of late payment fees. It also provides greater predictability and visibility into cash flow.
For instance, a company can schedule all of its payments to be made on the 15th of every month. Scheduling payments in advance makes it possible for them to plan for upcoming expenses, determine their cash flow at the point of payment, and empowers them to make better business decisions.
Enhanced security and fraud prevention
Batch payments require the use of Secured Sockets Layer (SSL) and similar forms of encryption that cannot be read while the transaction is in progress. Essentially, this encryption scrambles the data as the transaction is underway. In practice, it safeguards the privacy of data being transferred, keeping it safe from potential hacks or cybersecurity attacks.
Not just that, bulk payments also minimises the impact of human error as data is only keyed in once. This lowers the risk of double payments or overdrawing accounts by accident because the automated systems can quickly detect data error.
Simplified reconciliation processes with vendors
Reconciliation refers to the matching of payments made with invoices received. Bulk payments can simplify this process because businesses can easily review a single transaction rather than multiple individual payments.
For instance, if a business makes 100 individual payments, it will need to reconcile every payment with its corresponding invoice. This can be a time-consuming process. With bulk payments, it becomes possible to review a single transaction and easily match it with the corresponding invoices.
Takeaways
Bulk payments is a powerful tool that helps to streamline and simplify the way businesses approach payments. It reduces the risk of manual processes and human error by allowing a business to perform transactions in bulk. This results in better cash flow management, efficiency, and time and cost savings throughout the company.
If you’re looking for bulk payment systems, check out Wallex. Our platform allows you to pay up to 200 beneficiaries across over 160 countries in 47 currencies.
