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Payouts: The hidden value generator
March 22, 2023Return to blog list
Whether you call them withdrawals, disbursements, or just plain payouts, the reality is that paying money to customers is an often complicated process.
It’s also a process that can have an enormous impact on your business. No one likes waiting to get paid – and that applies to customers as much as it does to businesses. That’s why getting payouts right can turn one-time customers into lifetime advocates.
Ozow Payouts is designed to help you get it right, by simplifying the process of issuing payouts to your customers. We’ve used our fintech expertise to drive outcomes for a range of businesses, ending 2022 with a significant uptake from our valued merchant partners.
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A payout is the business process of paying out your customers. While this explanation might seem simple, it makes it distinct from paying suppliers for goods and services, which is a standard part of any business.
Payouts can take several forms, but they have one thing in common: they allow customers to withdraw funds from you. As we’ve covered before, we live in an age in which customers expect exceptional service, and are willing to shop around to find it. And there’s nowhere this is more true than where a customer’s own money is concerned.
That’s why payouts are important – they’re a direct opportunity for the business to demonstrate exceptional service. And Ozow Payouts are a direct opportunity to get payouts right.
The primary payout types are encompassed by refunds, prizes, and withdrawals. While refunds are a part of almost every business, prizes and withdrawals apply to a smaller pool – but one that’s still significant, and growing rapidly. These include igaming and retail investor platforms.
The former allows players to withdraw their winnings, while the latter uses payouts to allow their customers to withdraw investment funds and dividends.
To illustrate their importance, let’s have a look at each type of payout in isolation, and discuss how Ozow’s Payouts service helps your business.
Most business owners probably wish they didn’t have to deal with refunds, but the reality is they’re an important tool for maintaining customer satisfaction and the reputation of the business.
An effective refunds system is about more than simply allowing customers to refund damaged or defective goods. Done correctly, it can actually improve business outcomes by forming a key part of the marketing cycle: Consider money-back guarantee deals, which are often deployed as unique selling points for specific products.
Or, it can even be used as a point of differentiation for entire brands.
In Ozow’s own research, effective refund payouts also reliably generated repeat purchases. On average, this equated to customers spending six times the value of a refunded item with the same business, and in one case more than 30 times the value.
Many businesses make use of prize mechanics, though they may use different terms when doing so. While some ventures build their business model around these disbursements, the value of prize payout systems can go much further.
Africa is regarded as a growth region for digital gaming, with the sector expected to reach a market size of R658,8 million by 2026, which represents more than 100% growth compared to its size a decade previously.
The pastime’s rapid expansion in popularity makes finding a reliable, scalable payout solution vital, which may explain the enormous appetite Ozow has seen amongst our gaming partners.
That said, prize payouts can take other forms as well.
Competitions that include monetary payouts have been a part of marketing new ventures since before marketing was a recognised discipline. Ozow Payouts helps businesses bring this style of marketing into the digital age.
These sorts of tool sets have the potential to be particularly useful for small and medium enterprises. It means that small business owners can expand their reach. For instance, they can run an online competition in more markets over a wider area. This leads to broader recognition of their product, and access to a larger customer pool.
Like prize payouts, withdrawals don’t exist as a universal use case for payouts – but they do cover a wide swathe of businesses.
A major example of this is investing.
The investments industry has, for most of its history, been a closed ecosystem: In order to gain entry, potential investors frequently needed to satisfy an earnings or capital threshold. And access to markets was only through dedicated brokers, further limiting the ability for most to take part.
The digital age has changed this drastically, as investment platforms have opened the door to millions of so-called retail investors – individuals wanting to grow their own wealth. But for these platforms to work, customers need to be able to not simply invest their money, but withdraw it.
For this reason, effective payouts are paramount to the success of retail investment platforms. And as time has marched on, these aren’t the only platforms that rely on them. Since Bitcoin’s launch in 2009, the market has grown explosively, and is expected to exceed revenue of R745 billion in 2023.
Currently, more than 11% of South Africans own or trade in cryptocurrencies. However, while cryptocurrency exchanges are frequently hailed for their decentralised approach to finance, they still need to interact with modern financial systems in some ways.
One of these is through payouts: while an exchange might be decentralised, a bridge is required to allow ordinary customers to access and make use of the money earned on the platform. Accordingly, the end of January 2023 saw Ozow process a remarkable R220,1 million in investment-related payouts.
Though perhaps not the first thing you’d think of, the insurance industry may be the one area where payouts can have the most impact on consumers.
Once you do stop to consider it, the reasons are obvious: From a customer perspective, insurance frequently hinges on a customer getting access to funds in a timely manner. This is especially true in a country like South Africa.
Here, current statistics suggest that more than 75% of the population earns less than R6000 a month. Yet it’s also been suggested that up to 60% of households hold some form of insurance.
So what does this mean? It indicates that for many South Africans, insurance isn’t just a nice way to hedge your bets, it functions as a sort of emergency cover for items that your monthly salary and even savings may not be able to handle.
Given these circumstances, the ability for insurers to pay customers rapidly, safely, and with ease makes solutions like Ozow payouts not just useful, but vital.
And these are only a few of the sectors that payouts can have an outsized effect on. Everything from airline bookings to pre-payday salary access can be made easier with access to seamless, fast, and trustworthy payouts.
To find out more about how Payouts can help your business, visit our website or contact us to speak to our sales consultants.