For companies managing massive transaction flows, such as global payrolls and payments to thousands of associates or suppliers, the payment infrastructure directly influences the success of their operations, as there are many factors that can affect the organization’s financial efficiency, such as the level of scalability, the risk margin, the real operating cost, and processing speed. Due to this, many companies have decided to use cryptocurrencies for their batch payments; however, not all solutions are equal, which is why many companies are still debating between “standard” payments and “instant” payments with cryptocurrencies.
Below, we will look at the main differences between batch payments with cryptocurrencies in the “standard” model and the “instant” model, so that companies can determine the ideal payment architecture based on their needs and expectations.
Speed
“Standard” batch payments with cryptocurrencies depend on sequential confirmations from the main network, as multiple blocks are validated sequentially, which can take from minutes to hours depending on the asset and the level of congestion. On the other hand, “instant” batch payments with cryptocurrencies operate through optimized channels, specialized technology, and parallel networks, allowing settlements to be made immediately, almost in real-time.
For example, when making dividend payments on a global network, the “standard” system keeps the funds on hold, while the “instant” system reflects them in a matter of seconds. This difference eliminates the opportunity cost, as it allows beneficiaries to execute secondary transactions almost immediately.
Optimization of operating costs
In “standard” cryptocurrency batch payments, each individual transaction consumes a gas fee on the main layer of the blockchain; although “in theory” grouping payments can reduce the cost per unit, the accumulated fees and the need for multiple confirmations end up raising the total expenditure. For their part, “instant” cryptocurrency batch payments implement gas fee optimization through intelligent batching, consolidating thousands of outputs into a single contractual execution, which minimizes the writing of redundant data on the blockchain.
For example, when making massive e-commerce refunds, instead of paying multiple withdrawal commissions through the “standard” batch payment system, “instant” batch payment consolidates all operations into an efficient and unique flow, which allows companies to significantly reduce their operating costs by having fewer commissions, especially in high-volume transaction scenarios.
User Experience (UX)
A platform with a poor user experience generates friction and increases customer service inquiries. At this point, “instant” batch payments decrease customer service inquiries as they offer immediate transactions, which improves trust in the platform and provides greater peace of mind to users—this is vital in sectors such as Online Gaming, Delivery Apps, or Marketplaces.
For example, when making commission payments to freelancers or marketing affiliates, beneficiaries receive the commission instantly and the positive activity cycle is maintained; conversely, if the payment takes several hours, distrust toward the platform is generated and the beneficiary may suspend their activity.
Volatility management
When companies do not operate exclusively with stablecoins and use native cryptocurrencies such as Bitcoin or Ethereum, the time between the payment instruction and reception exposes the capital (in Fiat currency) to market fluctuations. In this case, when using “standard” batch payments, companies can remain exposed to market fluctuations for hours, so it is recommended to reduce transit time through “instant” batch payments.
For example, when making cross-border payments to suppliers in different time zones through “instant” batch payments, the “exposure time” to exchange rate risk can be reduced, which is fundamental to provide peace of mind to users, budget efficiently, and protect the companies’ profit margin.
Scalability and processing capacity
Generally, “standard” batch payments are limited by the rate of each block and the congestion of the main network, which can result in significant delays during peak demand times. For their part, “instant” batch payments are carried out through systems operating on parallel networks (sidechains), which allows for a significant increase in transactional performance without compromising the operation and service of the infrastructure, especially as transaction volume increases.
For example, when a global online gaming platform experiences a high-demand event (such as a massive launch), it requires processing and settling thousands of payments or microtransactions simultaneously; therefore, it must have a payment system with guaranteed scalability, which can be achieved through instant batch payments.
What do you think about this topic? Do you want to know more about the financial solutions offered by Smart Bulk Payments?
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