When should you move from manual to automation with APIs?
As your business grows, so does the volume of payments you have to make on a daily basis. If it’s only a couple payments a day, taking five minutes to log each payment manually is no big deal. But once you hit 100 daily payments, you’re spending over eight hours inputting payment details. And that’s assuming no breaks or time-consuming mistakes!
There’s no universal tipping point for when it makes sense to invest the time to integrate with a payouts API. But here’s a good rule of thumb: If you’re considering hiring one to two people just to manage accounts payable, you’re better off taking that time to integrate and save years worth of salaries.
Three options for payouts: pros and cons
Before you take the plunge, let’s walk through the three main options for payouts and their pros and cons.
Option 1: Manual Payouts
Pro: Simple data entry
Con: Slow, poor accuracy
There’s a significant difference in time needed between a traditional bank and a neobank with well-designed payouts in their web app. We’ll consider everything that requires individual data entry per “manual” payout.
Payment accuracy is essential to your business, so you’ll need to carefully read and input all the data for each payout (recipient’s banking details, amount, payment method, etc.). This takes time! When starting your business, this is the clear first step, but quickly becomes unsustainable as you scale.
Option 2: Batch Upload
Pro: Minimal setup, medium speed
Con: Medium accuracy
For sheets-lovers (CSV files) not quite savvy enough to do API integration themselves, batch upload provides a solid middle-ground option. If you have payments in the dozens but not hundreds, you can upload all of them in one “batch” CSV upload. (A CSV is a downloaded Google/Excel sheet with all the payment details arranged in neat rows).
There are some complications, however. Different countries require different payment details, which makes multi-country batch uploads prone to user errors. Similarly, when you’re in a rush and trying to complete payments quickly without checking each entry, it’s easy for a single stray keystroke to cause one of your payments to fail, go to the wrong recipient, or send the incorrect amount — all costly errors.
On the bright side, Airwallex has pre-made CSV payout formats for each payout location. So if you have a couple dozen payouts in a few different geos, you can avoid some of the complications around batch upload. Clearly, though, batch upload has its limitations as your business grows.
Option 3: API Integration
Pro: High speed, high accuracy
Con: Some setup
Now for the good stuff! Although API integration takes some upfront investment, it will automatically follow whatever logic you set up on your end to fire off quick and accurate payments at low cost. And no manual oversight is required from you. Airwallex employs a mix of automatic and hands-on transaction monitoring to ensure the compliance and safety of every payment.
This ensures the maximum speed and efficiency of your payouts, while also putting you in line with how the world’s leading digital businesses manage their accounts payable.
Getting started: What’s next?
If you’ve decided that using an API for your payouts makes sense, here are some steps you should take.
Find a company to handle your payouts
Finding a company that can cost-effectively payout to all the regions and beneficiary-types you need is important. Look for a company that can:
Open domestic and foreign currency accounts in order to trade globally without the red tape
Save time opening accounts across the globe. Eliminate excessive paperwork and wait times
Protect your money in a secure, ring-fenced account you can access whenever you like
Reduce costs with multi-currency capabilities leverage a sophisticated FX engine with no additional cross-border fees
Create a sandbox account
Create a sandbox account that allows you to experiment with how your unique workflow will work with your provider’s APIs.
Conduct a Penny-test once the rails are live
“Penny testing” is acommon practice in banking where a few small value transactions are made to test the reliability of the systems and processes involved.
Payment “rails” are the infrastructure that carries money between a payer and payee. There are distinct payment pathways in each country. For example, the US has ACH for cheap regular payments and Fedwire for more expensive and faster ones. There are similar rails in each market. You want to make sure that everything is working as you expect before pushing a large number of payments through any particular rail.
Zachary Filler holds degrees in Mathematics-Statistics and Chinese from Columbia University, and spent brief stints working for investment banks like Citibank and Goldman Sachs before his current role in Enterprise Strategy at Airwallex. Zach loves helping businesses access global financial services more effectively, but also plays a lot of chess in his free time, so you might spot him at the Mechanic's Institute in San Francisco!
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