15 July 2022

Stitch Payouts for Payment Service Providers (PSPs)

Stitch Channel Partnerships Lead Jessica Manthey shares how Stitch Payouts can simplify and automate diverse payments operations for PSPs, at scale.   The role of ...

Jess Manthey, Channel Partnerships Lead

|4 Minutes, 50 Seconds read

Stitch Channel Partnerships Lead Jessica Manthey shares how Stitch Payouts can simplify and automate diverse payments operations for PSPs, at scale.

The role of PSPs in South Africa’s e-commerce landscape

Payment Service Providers (PSPs) or Payment Aggregators make it easier for businesses of all sizes to send and receive digital payments – often enabling businesses to sell online for the first time.

PSPs enable, manage and support the payment life cycle and experience for e-commerce merchants, including the transfer of funds – from receiving and settling funds, to reconciliation. They also work to provide an exceptional payments experience for the merchants they serve and their customers.

Innovation in digital payments has led to increased optimisation of the pay-ins process (how the customer pays, or how a business receives funds i.e. funding a wallet or making a purchase from an online store). Stitch InstantPay and LinkPay products are examples of better, faster pay-in methods that provide a more seamless experience for merchants and customers.

However, particularly for e-commerce businesses, a single pay-in typically prompts multiple payouts that can be complicated and involve multiple parties. This can lead to a number of manual and time-consuming processes for the PSP managing payments for those businesses.

Payout needs might include payments sent to:

  • Consumers (e.g. receiving a refund or withdrawing funds from a wallet)
  • Vendors and suppliers (e.g. fees a merchant might owe to those that assist them in providing the service)
  • Employees (e.g salaries)

Let’s look at an example of an online clothing marketplace using a payment service provider in South Africa. One example flow for this type of merchant might look something like this:

  1. Customer places an order for items from several different brands on the platform
  2. Customer receives their order, but some of the items don’t fit, so they wish to send them back and request a refund

This may seem simple, but it involves a number of backend processes that today are often executed and tracked manually. If a PSP is involved, they will be responsible for managing multiple payouts for this single customer, which must be completed in a short amount of time to ensure that customer and merchant do not experience any interruptions in the flow of funds. This includes:

  1. Sending a partial refund to the customer
  2. Depending on the arrangement with vendors, disbursing payments to each vendor the customer purchased from
  3. Disbursing funds to the logistics representative used to deliver and return the items
  4. Managing float to ensure there are sufficient funds to supply the refund back to the customer


The above payouts need to be managed correctly and as efficiently as possible, across all merchant scenarios, at any given time.

Challenge: Trying to manage a complicated, manual web of payout requirements

These additional payout network requirements can be a headache as a single business scales, due to the time and effort required to ensure that the necessary payments are sent to the right accounts at the right time, and then ensuring accurate reconciliation and reporting is conducted. Payouts are also time-sensitive due to the nature of expectations for the payout receiver (e.g. a customer’s refund or an employee’s salary).

This process is also historically manual and prone to human error, resulting in failed payouts, which are costly and can interrupt the overall money movement process. This can be a headache from a cost, resource and service delivery perspective – and for PSPs, this headache is happening at scale across all their merchants, each of whom might have unique payout requirements.

How Stitch Payouts can help PSPs

Stitch Payouts can alleviate these challenges by simplifying payments processes and offering real-time payouts initiation over API for merchants.

The API will allow PSPs to:

  • Instantly verify beneficiary bank details
  • Schedule and submit the necessary payout requests via API
  • Settle refunds and disbursement payouts (they can choose either same-day (T+1) or instant)
  • Settle funds on a per-transaction basis or in bulk
  • Eliminate the need to log into a bank account, submit claims payouts CSVs or manually reconcile payout statuses
  • Track the status of a payout via webhooks to allow for customer service transparency with their merchants and their customers, as soon as a payment has been requested, authorised, submitted and settled
  • Automatically mark payouts as finalised to reduce the risk of duplicated payouts, and at scale, granularly track the accurate status across all their merchants


Stitch Payouts allows PSPs to offer more value to their merchants, like managing payouts in bulk, without the need to invest in internal resources required to build and manually operate the financial management requirements that come with enabling payouts at scale.

It also offers PSPs flexibility across their merchant payout requirements, which will help broaden the network of their industry offerings.

Stitch Payouts also contributes to reduced fraud and failed payments by verifying accounts being paid into. Stitch verifies accounts used to make each pay-in and applies automatic verification services to any new account details (in the case of disbursement). This mitigates the risk of failed payouts, which saves the PSP from unnecessary error costs and ensures that they can maintain their payout service delivery promises to their merchants.

The Stitch API will allow PSPs to offer a high quality, automated payouts solution to their merchants without the burden of additional time and effort for their teams, and without the risk of fraud and costly payout failures that directly affect their merchants’ bottom lines. Most importantly, it will enable uninterrupted customer service delivery to merchants and their customers by automating accurate and efficient refunds, withdrawals and disbursements, allowing them to close the payments loop seamlessly.

See how Stitch Payouts can help your business dramatically improve claims management processes by getting in touch at sales@stitch.money or accessing test credentials instantly via self serve.

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