When you’re just starting a business, there are a lot of things competing for your attention, like finding customers, building your product, and setting up the right systems to keep everything running smoothly. 

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One thing you’ll quickly realize is that you need a reliable way to pay vendors, suppliers, and service providers. Even as it seems like a small detail, how you handle payments can affect your time, costs, and overall efficiency.

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Should you go with the traditional payment method or leverage digital platforms? 

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In this article, you’ll understand how each option works. We compared traditional payout methods with modern solutions like Kora to help you choose a payment approach that saves you time, reduces costs, and supports your business as it grows.

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What is a traditional payout method? 

A traditional payout method is simply any way of sending money that relies on physical cash or manual, in-person processes. These methods have been around for years and are still widely used because of their familiarity and trustworthiness. 

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Think of services like Western Union or MoneyGram. They operate through physical locations where cash is sent and received.

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Here’s how it works:

1. You go to an agent location.
2. Complete a form, submit cash, and pay the fee.
3. The person receiving the money visits another location to collect it in cash.

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Common examples include:

1. Cash payments
2. Cheques
3. Bank transfers done manually at a branch
4. Phone-based payments through banks

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Even as this payment method is reliable, it can be slow and inconvenient. You may deal with long lines, limited working hours, and extra fees. 

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Plus, it’s not always easy to track payments or know exactly how much you’ll be charged. So, that’s a bit of a challenge. That’s why, as business becomes faster and more global, many are starting to look for simpler, quicker, and more flexible ways to send money.

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Evolution to digital payout for global SMBs

Digital payout methods are simply payments made online. That is, it requires no cash, no physical visits, and no paperwork. Everything happens through apps, websites, or payment platforms. 

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Instead of going to an agent or bank, you can send funds in just a few clicks. The person receiving the money gets it directly in their account, often within minutes.

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Why digital payouts are becoming the go-to option:

1. You can send and receive payments from anywhere in the world
2. Freedom to accept payments in different currencies
3. Choose from flexible payment options like cards, transfers, or bank accounts
4. Easy to keep a clear, real-time record of every transaction
5. Manage cash flow more efficiently

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Despite this evolution being a welcome development, many are still skeptical about its safety. The YouGov Global Report 2021 had it that even in the UAE, where over 90% of people use smartphones, about 39% of consumers still prefer to use cash for major transactions.

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While that’s a worthy concern, for most growing businesses, this digital shift has been a game-changer for growing businesses. Digital B2B platforms like Kora allow you to manage all your payments in one place. You can pay vendors, track transactions, and stay organized without juggling multiple systems.

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What makes Kora a dedicated digital payout method?

Kora is a dedicated digital payout method because it gives you everything you need to send, receive, and manage money all in one place, without the stress of traditional systems. Here’s what you get:

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Easy payment experience with API:

You can create and manage payouts from your dashboard or use Kora’s API to send funds securely using just the recipient’s bank details. 

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Strong security:

Payments are protected with advanced features like fraud detection, multi-factor authentication, and data encryption. Plus, your customers are verified in real time, adding an extra layer of security to your business.

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Clear records and tracking:

Every transaction is recorded, so you can see your available funds anytime and easily keep track of transactions across different currencies, get updates, and download reports for accounting. 

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Virtual cards for more control:

You can create and manage virtual cards for your team or customers, so payments are easier to control and track.

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Flexible settlements:

Once you receive payments, Kora settles the funds into your account. From there, you can withdraw or send payouts whenever you want.

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How do traditional and digital payouts compare?

The difference between traditional and digital payout is more than the transfer method, whether physical or online. When you look deeper, compare both side by side, other differences become clearer. Let’s explore further:

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Ease of use

With traditional methods, you often have to juggle multiple processes, like writing cheques, visiting the bank, or making transfers, depending on each vendor’s preference. It consumes your time. So, to make things simpler and faster, digital payout platforms like Kora allows manage all your payments from one dashboard, no matter the method or destination.

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Speed

Traditional payments can be slow. A cheque might take days or even weeks to arrive and clear. Bank processes can also add delays. Digital transactions, on the other hand, are much faster, often completed within minutes or a few business days, with options for even quicker transfers when needed.

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Versatility

Traditional payment systems usually limit you to the payment method your vendor accepts - either cash or cheque. Digital payout gives you more control. You can move funds from your merchant account to any bank account. For instance, Kora allows you to choose how to pay, while your recipient gets the funds in a way that works best for them. This is especially helpful if you’re dealing with multiple vendors or sending money internationally.

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You can manage your payouts in two main ways:

1. Payout API:

Send single or multiple payments directly from your application. You can even transfer to multiple accounts at once, which is perfect for payroll or paying many vendors at the same time.

2. Withdrawals:

Move money to your own bank account without any integration. Quick and simple.

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Overall, everything is managed directly from your dashboard, so you have a clear view of your transactions, the channels you used, and your payment history. 

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Charges

There’s a lot to pay for with traditional transfers, some hidden, others visible. Examples include bank charges, cheque printing, postage, plus the time spent handling everything manually are too high a cost. You won’t pay as much with digital payment platforms. The processes are automated, removing the need for physical materials, thus reducing costs. 

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Safety

Traditional payments rely on physical items like cash and cheques, which can be lost, stolen, or misplaced. Digital platforms like Kora reduce these risks by using encryption, fraud detection systems, and secure authentication processes. While no system is completely risk-free, digital payments generally offer stronger protection and better tracking.

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Accessibility and reach

Physical payment methods are limited by working hours and physical locations. But when done online, you’re free to send and receive funds anytime. That is, you have 24/7 access to your funds. You can even send money across borders wherever you are. 

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Currently, Kora’s Payout API lets you send money to a variety of accounts across different countries and currencies, including:

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Bank accounts:

• Nigeria (NGN)
• Kenya (KES)
• South Africa (ZAR)
• United States (USD)
• United Kingdom (GBP)

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Mobile money accounts:

• Kenya (KES)
• Ghana (GHS)
• Ivory Coast (XOF)
• Cameroon (XAF)
• Egypt (EGP)

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This makes it easy to pay vendors, employees, or partners wherever they are.

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Technology and growth

Traditional systems tend to be slower in adopting new technology. However, digital platforms are designed to scale with your business. Kora, for example, offers APIs, automation, and tools that grow with you as your payment needs become more complex.

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So, which should you go for? Traditional or digital payout method?

Cash and cheques were once king, but their opportunities are limited with international payments. 

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Digital payouts remove the barriers so businesses can grow and function more efficiently. Thankfully, many small and growing businesses have been adjusting to this new technology. 

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In Sub-Saharan Africa, most account holders have made or received at least one digital payment, with money moving directly in or out of their accounts. In countries like Kenya and South Africa, digital payment usage is extremely high, reaching 95 to 98 percent of account holders.

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Overall, as more businesses adopt digital solutions like Kora, we’re moving toward a future where payments are simpler, faster, and more customer-friendly. The future is in your pocket. 

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