Payouts is software that lets a business send money out to many bank accounts at once. A business uses it to pay refunds, salaries, vendors and sellers. It is also called bulk payouts, or a payouts API.
Most payment software is about receiving money. A payment gateway collects money from customers. But a business also has to send money out. Take, for example, a food delivery company in Bengaluru. Every day it has to pay thousands of delivery riders for the orders they delivered. Every week it has to pay hundreds of restaurants. It also has to refund customers whose orders were cancelled.
Sending each of these payments by hand, from the bank's website, would take days. Payouts software does it in one step. The business's software sends one request, called an API call, with a list of payments. Each line in the list has a bank account number or a UPI ID, a name and an amount. The payouts software then sends each payment through UPI, IMPS or NEFT. Most payments are credited within seconds.
The money comes from the business's own current account. A current account is the bank account that a business uses for its daily payments. The payouts software is connected to this account, and it debits each payment from it.
Before paying a new account, payouts software usually checks that the account is real. For instance, when a new rider joins, it sends ₹1 to the rider's bank account, and the bank returns the name of the account holder. If the name matches, the account is correct. This check is called penny drop. It stops money from going to a wrong account because of a typing mistake.
Payouts also finishes the work of split payments. On a marketplace, the gateway first divides each customer payment between the sellers. Later, payouts pays each seller the amount that belongs to them. Payouts is also used by ride-hailing apps to pay drivers, and by accounts payable software to pay a company's suppliers.
For payments to other countries, payouts software hands the payment to a cross-border payout network.
Engineers who build payouts have one main worry. A payment must never be sent twice, even if the request is repeated after a network error. Every payment also has to be reconciled: matched with the bank's record, so that every rupee sent can be accounted for.