Mass payment facilitator Tipalti is bringing its technology to advertising payments through a partnership with Cake Marketing, which provides services for performance-based marketing.

Tipalti will integrate its payments execution and document management capabilities into Cake Marketing's online campaign tracking, allowing users to create payment instructions for performance-based campaigns. Performance-based marketing refers to advertising, mostly in digital channels, in which payments are based on tangible outcomes such as lead generation, sales or downloads.

The payments needs of Cake's clients can be complicated, says Eran Karoly, a vice president at Tipalti. "The advertising and affiliate networks have to very precisely track the advertisements and offers…and calculate the amount of money owed to every affiliate advertiser," Karoly says.

Tipalti's technology allows Cake to avoid manual payments management, as well as the need to navigate payments in different currencies and delivery methods, Karoly says.

To use the service, Cake clients and affiliates must first create a new account.

"It's a quick and easy to sign up for, similar to signing up for deposit when you join a new company," says Ryan Meuse, vice president of product for Cake Marketing.  

After registration, Tipalti provides a white-label product for the clients to manage and update payment information that's viewable on Cake's dashboard. Payment requests can be sent through Cake, with the transactions routed by Tipalti.

"Tipalti allows mass payments to suppliers or vendors, these vendors can be outsourced employers, publishers or advertisements, anybody that has lots of [people] who need to be paid," Karoly says, adding Cake's clients often have hundreds or thousands of affiliates.

Payment instructions are captured by Tipalti's payment engine, which vets payees for compliance, fraud and other risks. Payers can also allow payees to choose a payment method and currency, and Tipalti manages tax records and invoice reconciliation.

"We can pay out in the currency that the affiliate chooses. The currency exchange occurs behind the scenes so the [transaction participants] don't have to worry," Meuse says.

The Cake and Tipalti technology is delivered as a Software as a Service (SaaS), which is designed to reduce deployment costs and manage spikes in transaction volume.

"The primary benefit to running this in a cloud is that these kinds of payment activities are inherently variable and erratic in terms of user load," says Bernard Golden, a cloud computing consultant. "Using a cloud-based solution supports highly variable user loads since additional resources can be added to and subtracted from the application topology to support current application load."

Tipalti has provided similar service for Article One, which also uses an affiliate-based model to pay people who perform patent research—mostly to spot patent trolls.

Group payments become particularly complex when the recipients are in different countries, says Patricia McGinnis, a director at Mercator Advisory Group.

"If the [payees] are in multiple countries, the paying company has to understand which countries require which data to execute a payment. And of the available means to pay, which is the most efficient, or fastest or least costly. This requires a big payment network and a lot of very specific expertise," McGinnis says.

While a partnership between a mass payments company and a marketing company is rare, there are several other businesses that are active in mass payments, such as Payoneer, EarthPort, PayPal and Western Union, McGinnis says. Other providers include Dwolla.

"Each has a deep expertise in how to pay into many countries, whether by wire or bank account deposit, or credit or prepaid card," McGinnis says, adding Payoneer, for example, specializes in payroll for offshore personnel and freelance networks.

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