Gone are the days of paper-based payments and slow bank transfers. We’re entering a time where instant payments are not only possible – they’re everywhere.
A study from Juniper Research found that the number of instant payment transactions will exceed 376 billion a year globally by 2027, increasing from 97 billion in 2022. This represents a growth of 289%.
This growth will be driven by an increase in the number of instant, cross-border payment providers around the world, enabling more businesses and consumers to benefit from greater transaction speed and efficiency.
Performance marketing is at the centre of this change. As publishers and advertisers increasingly rely on faster fund movement and revenue payouts, the biggest players in the industry are rushing to meet this demand – and facing several challenges in the process.
Returns, cancellations and ‘completed’ actions
The performance industry lives off of costs-per-action (CPA) rewards. Advertisers pay publishers for completed actions and the publishers want to receive their rewards fast.
But, what constitutes a ‘completed’ action? If we’re talking about the sales of goods through online retailers, we have to take a company’s returns policy into account. If a product is returned, the action is rendered void and a publisher will not receive a reward for it. If a product isn’t returned, but the company has a 30-day returns policy, the publisher will still have to wait 30 days before that action is listed as ‘completed’ and they can receive their earnings. This is a barrier to instant payouts.
It doesn’t just happen in e-commerce either – think about the travel industry and last-minute cancellations of accommodation booked months in advance. The publisher would simply have to wait and see if and when they get paid. The situation gets even more complicated when working with non-standard return policies or in international, multi-locational markets with various bureaucracies.
Delays in payment are a core feature of this industry, and the whole payment process would need to change before publishers could truly get their payouts instantly.
Affiliate networks are willing to shoulder the risks
But, publishers still have to wait for a long time before they can access their hard-earned commissions, and where there’s a problem, the market finds the solution.
Performance marketing platforms are rushing to introduce their own faster payment systems. These systems work as an active go-between, bridging the gap between an advertiser approving an action and a publisher receiving payment.
The platforms shoulder the risk of non- or late-payments themselves, self-financing the payouts to publishers before the advertiser has marked an action as complete and transferred the funds.
Admitad Instant Payout Pro is a forerunner in this. It uses trained AI algorithms to predict if an action will eventually be approved by an advertiser, dispensing the rewards to the publisher way ahead of time - in a matter of hours instead of weeks. The algorithm has already achieved 95%+ accuracy in predicting whether advertisers will meet their obligations based on their forecasted transactions, and it continues to improve.
Fuelling growth through ready access to funds
By shouldering the instant payouts themselves – effectively temporarily financing their publishers – platforms offer their partners the opportunity to further scale up and grow, bridging cash flow gaps and freeing up resources for reinvestment.
They also provide a substantial competitive advantage. In the case of cashback services and loyalty programs, instant payout allows these businesses to provide their users with any cashback, rewards or point payouts immediately after making a purchase, incentivising further purchases. For media buyers who calculate a projected return on investments for every dollar they spend, they can use an instant payout system to quickly funnel funds directly back into campaigns, further boosting revenues for both themselves and their advertisers.
This alternative type of financing also opens the doors to ‘factoring’ – where late or deferred payments can actually be bought off a publisher at a reduced rate by the platform itself, in exchange for an instantly-accessible pool of funds.
Will instant payouts become the new norm for affiliate partnerships?
Bain & Company projects retail payment industry revenues to reach $480 billion by 2026. Software and tech firms will take a greater material share of payment origination volume and revenues in many markets - and as much as 90% of today’s payments revenue will change ownership.
This movement can be seen everywhere - Apple Pay, for instance, ranks second in the Net Promoter Score, trailing only PayPal, and half of Apple Card users aged 25 to 34 cite it as their main credit card, according to Bain.
Platforms offering instant payout and fast transfer solutions gain a key advantage over their competition. Although there are still obstacles to overcome - further legislative and operational procedures need to be fixed in place and followed. Publishers and advertisers should also always be given the option of if they want to use these new systems or not.
But it seems, at least for now, these new instant payment methods for the performance marketing industry are here to stay.
