Direct selling organizations are made up of distributors or representatives who sell the organization’s products direct to their personal contacts. Direct selling is also called multi-level marketing and network marketing, as the distributor markets to his personal network. In addition to usually receiving a commission on sales, distributors are often rewarded for recruiting new distributors. Well-known direct selling brands include Avon, Amway and Herbalife.
Direct selling organizations have found success in recruiting new distributors outside of the United States, in a large number of countries around the world. This has complicated the way payments are distributed. Direct deposits to a bank account or simply mailing a commission check is relatively simple and problem-free within the United States. But a distributor abroad may have to wait up to 6 weeks before a US check arrives in the mail, and then wait even longer for the check to clear. Direct deposit is not an option without a US bank account. Wire transfers require the recipient to have a local bank account, and usually charge high bank fees, chipping away dramatically at commissions.
There are a number of electronic funds transfer (EFT) services available that are faster, more convenient and less expensive than the traditional methods of checks and wire transfers. The introduction of innovative payment methods has meant that distributors can receive their money more quickly and keep more of it. For example, online payments offer more flexibility and are more cost-effective for distributors who do not have US bank accounts. These methods generally offer an online account or “wallet” where money can be deposited and spent. Should the distributor have a number of online expenses, particularly from suppliers who offer the same payment service, online payments can be the right choice.
However, cashing out payments from online wallets can be complicated and can become as cumbersome as using the traditional payment methods.
An innovative method now being offered by leading direct selling organizations are payments direct to co-branded prepaid debit cards such as MasterCard and Visa. The cards are extremely popular with the brand-loyal distributors, allow easy cash-outs from ATMs or spending any where that accepts the debit cards, and do not require a US bank account or credit check. The direct selling organization transfers the funds to the card accounts, and the money is then instantly accessible online, at shops and restaurants or at ATMs. Furthermore, if issued by a US bank, the card accounts are FDIC insured and often offer protections against unauthorized purchases.
By incorporating co-branded payment cards into their payout processes, direct selling organizations have found a way to turn around the cost and hassle of international payments into a cost-effective, easy marketing tool.
Tomer Bar-Zeev is the VP Marketing for Payoneer, the online mass payout solution that pays directly to universally accepted Prepaid MasterCard cards. For more information on Payoneer visit http://www.payoneer.com