Payouts are a crucial way to disburse funds through a financial network. Extended beneficiaries can be used multiple times, or used for different payouts. The difference between an extended beneficiary and a regular beneficiary is that more information is collected. This data is to ensure compliance with financial regulations. The beneficiary information can be gathered and stored for later use, and the information about the beneficiary ID is tokenized.
What is a Beneficiary?
The beneficiary is the recipient of a payout. So when a payout disburses funds, the funds are directed to the beneficiary. The beneficiary can be an individual or a company. Information about the beneficiary is collected in order to verify the payout and to make sure the funds are disbursed to the correct bank account.
Beneficiary information is tokenized because the information that is collected can be classified as Personally Identifying Information, or PII. Tokenization is a process where a piece of information is assigned to a randomly generated alphanumeric string called a token. The token acts as a kind of bookmark. The token is passed through the network, keeping the sensitive beneficiary information safe.
Tokenization is an important element of a secure network. If there was a data breach, or if the financial network became compromised, the tokens would be meaningless to an outside third party and not reveal any sensitive information to them.
Rapyd Offers Flexible Payout Options
Rapyd offers a wide variety of payout methods that can allow you to have payouts your way. From bank transfers to card payouts, Rapyd allows you to make disbursements that are easy and efficient.
You can send a hosted page to your beneficiary to collect the necessary information when you need to create a payout. Check out our user documentation to learn more about the process. Once you have gathered the information, you can save the beneficiary details for later if you need to make new payouts in the future. The information is stored in a tokenized beneficiary ID, which can be reused when creating payouts via the Rapyd API.
The Importance of Extended Beneficiaries
Using an extended beneficiary can be highly useful in a wide variety of situations. For example, you could create a payout with an extended beneficiary if you wanted to:
- Make disbursements to independent content creators
- Create payouts for entertainment-based business platforms
- Make a local payout to a supplier
Extended beneficiaries follow compliance rules more closely, and allow you to create a payout that can reach a wider audience. Extended beneficiaries are particularly useful for making cross-border transactions. The extra level of validation helps to make sure the payout is even more secure.
Extended beneficiaries can also form an integral part of the KYC, or Know Your Customer process. Although beneficiaries may not always be your customer, taking the time to properly validate all parties involved helps to create a safer environment.
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