Frequently Asked Questions
Need an answer?
- General Questions
- Tax and Regulatory
- Payment Methods
- Global Coverage
- Banking and Financial Institutions
- Fraud Mitigation
Why do I need a global payout solution?
A growing dependence on foreign partners and suppliers to expand a business adds significant accounting and operational complexity. That’s because there are a multitude of payment options, including payment methods, tax implications, and currency, that should be localized for that specific partner. A global payout solution like Tipalti enables companies to centralize and execute all payment processes for all partners, regardless of jurisdiction. In addition, the business can maintain records for reconciliation in one place.
Isn’t PayPal a global payout solution?
PayPal provides some global payout capabilities, however, not all locales accept PayPal. In addition, your partners may not want to be paid with PayPal since people receiving PayPal also have the extra step of converting the funds into something useful such as a debit card or bank account. Payments made with PayPal also must be manually reconciled with other systems.
Does Tipalti only do payments?
Payments are a core function to Tipalti’s solution, however, several additional benefits come with using our system. One is our Risk Management Module, which detects payees who may put the company at risk. Their risk level is measured for fraud, based on historic or reported data. Tipalti also provides a solution for electronic invoicing and payment reconciliation. A built-in support mechanism also helps resolve payment issues between you and your payees.
As a small company, does it make sense to start with Tipalti or PayPal?
This is a question of volume. If the manual PayPal process is not an issue for your company, then you probably don’t need Tipalti. However, if your business is growing in complexity and if the payment processes (including taxation, remittance, reconciliation, partner issues, fraud protection, etc.) are taking time away from other critical functions in your organization such as analysis or strategic involvement, you may need to consider an option like Tipalti.
Tax and Regulatory
Does Tipalti handle compliance?
Yes. Tipalti collects tax form information from all payees, including W-9s and W-8s, during the payee registration process. An end-of-year 1099 service takes care of submissions to federal and state authorities, as well as mailing of payee forms. Prior to making payments, every payee is scanned against US and international blacklists to avoid payouts to suspected terrorists, money launderers, and drug traffickers. Tipalti’s database is updated regularly with all the latest information to ensure full OFAC, AML, Anti-Terror, and Anti-Narcotics compliance.
Who needs to complete a W-9 form?
A US person or company (see IRS definition) is required to complete a W-9 form. Payees complete this form electronically under the ‘Tax Forms’, ‘Prepare W-9′ tab.
Are non-US payees required to complete a tax form?
Non-US persons (as defined by the US Internal Revenue Service) are required to complete an online statement to that effect. Generally speaking, non-US persons are people or entities that have no United States activities including, but not limited to, owning a web server/hosting service in the United States, or having employees in the United States providing services that are involved in generating income. Disclaimer: Tipalti does not provide tax advice. Payers and payees should consult their tax advisor to determine tax status and eligibility.
Can I use PayPal without being signed up for PayPal Mass-Payment?
Yes. Tipalti will process your PayPal payments as either regular transactions or as PayPal Mass-Payment transactions. This is ideal for countries where PayPal Mass-Payment is not available.
What are the fees associated with the payment methods?
Fees are clearly displayed in the “Payment method” tab allowing the payee to choose the most cost efficient method to fit their needs. In addition to the fees listed, all non-USD payments (except PayPal payments) are assessed an FX fee. PayPal FX fees (on withdrawal) are variable up to 3.9% (see PayPal’s website for more details). The pros and cons of the various payment methods are listed below.
|Payment method||Main Attributes|
|ACH / Direct Deposit||Fast and inexpensive electronic money transfer to the payee bank account. Available in the US.|
Local Bank Transfer
|Fast and most cost-effective electronic money transfer to the payee bank account. Available in 29 countries.|
|Paper Check||Checks are sent via postal mail and delivery times can be longer. Paper checks are offered in multiple currencies.|
|Wire Transfer||Funds are transferred directly to the payee bank account. Fastest and most reliable method.|
|PayPal||Funds are transferred to the payee PayPal account. See PayPal’s website for information regarding availability of withdrawal in each country.|
|Cash||Funds are transferred by Western Union and can be collected electronically or in person.|
|Prepaid Debit Cards||No bank account required. Prepaid debit card loaded remotely and can be used at any location thatacceptsMasterCard and Visa.|
How does a payee select a payment method?
The payee navigates to the “Payment Method” tab and selects any of the payment options available in their region. Once entered, a payee can change the method by selecting the “Edit” link at the bottom of the frame. All required fields must be entered and validated by Tipalti’s servers before a payment method is accepted. This ensures the information is complete and minimizes the chances of payments being rejected, a costly mistake for payees.
What is SEPA?
SEPA (Single Euro Payment Area) is an expansion to the eCheck/Global ACH payment method, enabling payees in all Euro countries to receive direct bank transfers at a much lower cost. In some countries (e.g UK, Sweden) the local currency is supported alongside the Euro.
SEPA payments are supported in the following countries (updated July 2013):
Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, Netherlands, Portugal, Slovakia, Slovenia, Spain, Denmark, Bulgaria, Czech Republic, Hungary, Latvia, Lithuania, Poland, Romania, Sweden, United Kingdom, Iceland, Liechtenstein, Norway, Monaco, Switzerland, Martinique, Guadeloupe, French Guiana, Reunion, Gibraltar, Aland Islands.
How are global payouts different than domestic ones?
Global payments can be very complex. If you are sending money to several countries, you may be subject to specific tax and regulatory compliance. Maintaining that compliance information often requires a full-time team of legal researchers.
What payment options are available in each region or country?
Payment options available to a payee are listed under the ‘Payment Method’ tab presented to the payee when logged in to the payer’s system. The table below summarizes the main payment options by geography:
|Payment method||Countries offered|
|ACH / Direct Deposit||USA|
Local Bank Transfer
|Aland Islands, Australia, Austria, Belgium, Bulgaria, Canada, Cyprus, Czech Republic, Denmark, Dominican Republic, Estonia, Finland, France, French Guiana, Germany, Gibraltar, Greece, Guadeloupe, Hong Kong, Hungary, Iceland, Indonesia,India, Ireland, Israel, Italy, Jamaica, Latvia, Lichtenstein, Lithuania, Luxembourg, Malta, Martinique, Mexico, Monaco, Morocco, Netherlands, New Zealand, Norway, Poland, Portugal, Reunion, Romania, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Trinidad & Tobago, Tunisia, United Kingdom|
|PayPal||See PayPal coverage|
|Prepaid Debit Cards||All|
Banking and Financial Institutions
Who does Tipalti bank with?
Tipali works with Citibank directly, and is adding more banking partners to meet the needs of our growing customer base. If you have a specific bank in mind, please contact us and we can let you know when they will come online.
What are the FX fees?
FX fees are applied when funds are sent in the payee’s local currency (other than USD) for the following international payment methods: wire transfer, eCheck / Global ACH / Local Bank Transfer, paper check.
Can I import a list of payees?
Yes. Tipalti supports payments through a direct API integration or as a payment file (CSV) uploaded to the system.
How fast are payments being processed and when are payees informed of payments that were made?
Payments are processed immediately upon file/instructions being submitted (and approved, if the Payer has chosen “Approve” as a required step), and can take a couple of hours to be executed by the bank.
There are 2 terms to consider: Processing Date (PD) and Value Date (VD). Processing Date – is the date the bank considers the payment request to have arrived. Value Date – is derived from the processing date. E.g. US wires are PD+1 and ACH is PD+1 or PD+2.
Payments submitted by 8am EST are guaranteed to have a same-day PD. Anything later is on a best effort basis.
Emails to payees are sent when the bank confirms that the payment was processed successfully, which can take approximately 1 business day after the payment was submitted.
Once Tipalti gets the information from the bank, emails are sent to the payees.
Can I identify high-risk payees?
Tipalti has an optional Risk Management Module to help identify suspicious payees. They are flagged within the system and includes the situations where the transaction was deemed risky. This module also identifies payees across the entire Tipalti network so you benefit from fraud checks made by other customers.