What Is Mass Payment?

Mass payment is a method of paying multiple recipients online simultaneously. Instead of typing in each recipient’s payment information separately, users can upload a spreadsheet containing all the relevant data or use a mass payments application programming interface (API). Mass payments can be set up as one-time transactions or, if the payment amount is always the same, as recurring automatic payments. Mass payments may also be referred to as "mass payouts."

Key Takeaways

  • Mass payments refer to transactions involving several recipients sent simultaneously by a single sender, saving a great deal of time and expense in sending multiple payments.
  • Mass payments are facilitated through technological platforms and payments services companies.
  • Mass payments are commonly found in paying accounts payables, payroll, and batch processing.

Understanding Mass Payment

Mass payments are a faster, easier and potentially more cost effective solution to sending out checks (though there is a fee to use a mass payment service), and recipients appreciate receiving their money faster and more securely, which helps protect and boost the payer’s reputation.

Instead of waiting to receive a check in the mail, recipients receive a link via email or mobile phone to claim their payment through a secure online account. They can then transfer the money to their bank account, receive it on a payment card, collect it at a cash pickup location, or use it to make online purchases, depending on what options the mass payments provider offers. Mass payment services are typically available from money transfer companies such as PayPal.

Mass Payments in Practice

Payment logs allow senders of mass payments to keep track of their complete payment history, and senders can easily export payment data to spreadsheet or accounting applications. Payments may be sent to recipients in different countries and in different currencies, too. In this way, mass payments allow businesses to reap the potential benefits of expanding the scope of their customers and vendors worldwide without creating a drag on accounts payable.

Situations where mass payments can be a huge time saver include paying affiliate commissions, customer rebates, survey incentives, and employee benefits, especially when these payments are sent out frequently.

Batch processing is a common form of mass payment. It is the processing of transactions in a group or batch. No user interaction is required once batch processing is underway. This differentiates batch processing from transaction processing, which involves processing transactions one at a time and requires user interaction. While batch processing can be carried out at any time, it is particularly suited to end-of-cycle processing, such as for processing a bank's reports at the end of a day or generating monthly or biweekly payrolls.

Mass Payment: Execution and Benefits

Mass payments shift the payment model from sender directed to receiver directed. Instead of the sender of the payment offering limited payment options, the recipient can choose how to get paid and exercise greater control over the payment process. Further, the organizations sending the payment can save money, especially when it comes to making international payments, which traditionally incur significant wire transfer and foreign exchange fees plus the fees for paperwork associated with doing business with many financial institutions in many countries.

Mass payments can also save senders time as recipients can provide their personal information to the mass payments vendor rather than to the sender. The freed up resources like time and money can be redirected to core business activities or freed up to keep costs down.

Senders should make sure their mass payment vendor employs strong security practices to protect their platform against data breaches and other security threats.