What the Payments Industry Can Learn From FedEx
Consider the following scenario. You’re the Head of Payments at an on-demand economy company—let’s call it Zuber. You’ve recently opened a new office in the U.K. and you need to send the originals of some paperwork to an overseas colleague. There’s just one problem: the contracts need to be in the hands of your English coworker within two days. Now you have to decide whether to send the documents by standard mail and risk having them arrive late, or opt for an express service, like FedEx, to ensure fast, efficient, and secure delivery.
The choice is obvious in this situation: send the documents with FedEx. This is because using an express mail service ensures a handful of things (depending on which provider you choose, of course):
- Validation of the address to which you’re sending the package
- Seamless trace-and-track visibility from pickup to delivery (including import and departure scans at all depots)
- The added security of signature proof of delivery
- The ability to share shipping updates via e-mail
- The option to redirect shipments
Expedited courier services have built their reputation around dependability, security, efficiency, and ease, effectively taking advantage of holes in the standard mail delivery process. Because, let’s be honest, when you toss a letter in the mailbox on the corner, who really knows what happens next? There’s no visibility into the delivery route. There’s no verification that the address you’re sending the letter to exists, or insight into how long it will take for the item to arrive. For all you know, that letter is being delivered by a carrier pigeon!
Where Are My Earnings?
Now, let’s imagine that as the Head of Payments at Zuber, you’re trying to send earnings to your workers. As much as I hate to admit it, bank money transfer models, especially those built to handle high volumes of worker payouts, are built a lot like traditional mail delivery systems. When you use a bank to send money, especially cross-border worker payouts, it’s a lot like popping a letter in the box; the sender and the recipient have no choice but to trust that the banks involved in the transfer will execute it quickly, securely, and as affordably as possible (which, if you’ve ever sent a cross-border transfer, you’ll know is definitely not the case).
Like the standard postal service, there are a lot of holes in bank money transfer systems. For starters, there’s typically no validation of the destination bank when a transfer is initiated. While you may be asked to provide a routing number (the number that’s associated with the bank branch where you want to send the money to), there’s no guarantee that the bank from which you’re initiating the transfer will check to make sure you entered a valid number. Mess up one digit and you won’t know until the payment fails. Worse yet, you won’t know where your money is, when you’ll get it back, or what amount will be returned to you.Like the standard postal service, there are a lot of holes in #banktransfer systems. Click To Tweet
It gets worse. Let’s say you want to send a worker payment from Bank A to Bank B; however, these two financial institutions don’t have an agreement with each other to enable this transfer. In order to successfully move your money between accounts, Bank A needs to send the funds to Bank C, which is a mutual partner of Banks A and B—but neither the sender or the recipient is notified of this rerouting. Nor are they told about the additional time and costs associated with this detour. There’s no way to track or confirm delivery of the payment; rarely is there even an estimation of when the funds might show up. There is, quite literally, no visibility in your transfer path. For all we know, that letter-carrying pigeon could have your money strapped to its back.
Clearly there’s an issue with how banks manage cross-border money transfers and payments. The process is inefficient, costly, and archaic. That being said, I can understand why it is the way it is—building a truly global platform that enables FedEx-like payment transfers is no easy feat. I know firsthand, because we’ve been building this exact solution and network here at Hyperwallet.
Send Worker Payouts Like You Send Packages
Providing our clients with granular control over their worker payout process through trackable cross-border payments has long been our goal at Hyperwallet. Like express mail services, our global worker payment solutions make it easy for companies like Zuber to:
- Ensure that the destination bank and account are valid using bank validation databases before sending the money.
- Fully track-and-trace payment visibility, beginning the moment the payment is uploaded into the system.
- Pinpoint delivery date through enhanced delivery algorithms that take into account national and international bank holidays, payment network cutoffs, and delivery service-level agreements.
- Provide recipients with full control over how they receive their funds.
And, thanks to new advances in real-time ACH, we’re getting closer to including delivery confirmation, providing the first true end-to-end payout tracking value chain. As you can imagine, there are an overwhelming number of use cases for this new technology—just think of the thousands of collaborative, on-demand, and sharing economy platforms that could benefit from integrating this granularity into their worker payment experience. Fast, secure, simple, and streamlined—sending money to your contract workforce can be as easy as sending an express package with FedEx.