As the pandemic forced businesses to rethink their hiring policies and individuals to seek new employment, freelancing took off in a big way. The combination of freelancing and crypto – another winner of the pandemic – offers powerful synergies to individuals and companies alike.
What are crypto payroll services?
Crypto payroll services are applications that integrate crypto payments into businesses’ accounting processes, automating invoicing management and settlement.
Organising crypto payments manually is complex, time-consuming and error-prone. Dollar-denominated invoices need to be converted to the right amount of the required crypto given the market price at the time, and sent to the correct address – once. Mistakes and duplications are easy to make, and because crypto transactions are irreversible, problems can be hard to correct.
Crypto payroll software takes care of these issues, integrating invoice processing and crypto settlement into companies’ existing accounting routines, enabling businesses and employees to enjoy the advantages of crypto payments without the potential downsides. A number of crypto payroll solutions now exist, including:
- Bitwage, a California-based company that was one of the first entrants to the space.
- PaymentX, a product launched by Australian blockchain outfit Tech, responsible for a suite of HR products and the Coinbase-listed TIME token.
- Request Finance, a one-stop solution for invoicing, salaries and expenses, which supports over 70 digital assets and 10 blockchains.
Here are five reasons why DeFi or regular businesses might want to consider integrating crypto payments and payroll software.
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Access to global labour markets
Bitwage notes that remote workers have earned almost half a trillion dollars from US employers so far this year. Some of those workers might be in the same town or country; others might be on the other side of the world. However, the conventional financial system is not well suited to transferring money abroad, especially in small amounts, due to the punitive exchange rates and fees entailed. Additionally, some prospective freelancers simply won’t be able to receive money through conventional channels at all, especially if they’re one of the 1.7 billion unbanked people in the world.
Crypto opens the possibility of working with freelancers all over the planet, in any country, regardless of whether they have a bank account – giving businesses access to a truly global and competitive labour market.
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Low fees
Crypto transactions are cheap compared to TradFi payment processing services. Banks and money transmitter services typically impose high flat fees and unfavourable exchange rates. While this may not be such a problem when transferring thousands of dollars to a wealthy client, it makes all the difference when dealing with smaller sums.
Transferring crypto or stablecoins on the right blockchain or L2 costs a few cents, meaning payments are efficient and freelancers receive more for their efforts. The small flat fees involved mean it costs no more to transfer $1 million to the other side of the world than it does to move $100 to a friend sitting next to you.
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Instant transfers
Banks are typically slow when it comes to moving money across international borders. Payments can take anything from two to ten days to clear, depending on the countries and circumstances involved. Additional delays (or even blocked funds) may be entailed if the banks are suspicious about the transfer – which may occur simply when funds are moved to a recipient who lives in a particular country.
Crypto transactions are effectively instant. The recipient will be able to see that the transfer has been initiated immediately, and within seconds or a generally few minutes at most, the funds will be confirmed and spendable. And, like the low fees, that’s true no matter where the money is heading.
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Transparency
The blockchain is an open, shared ledger, accessible by anyone with an internet connection. Pending and confirmed transactions can be checked, so it’s clear whether money has been paid or not.
Moreover, payments and freelancer platforms can integrate smart contract functionality. Funds may be escrowed until the work is completed, at which point they are automatically released to the recipient. This avoids the problem of non-payment and gives freelancers confidence that their employer will treat them well – often a problem when working with people you’ve never met.
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Attractiveness of digital assets to freelancers
Finally, many freelancers simply prefer to be paid in cryptocurrency, as evidenced by the rapid growth in crypto freelancer platforms such as CryptoTask, LaborX and CryptoGigs. Partly this is down to the advantages of speed, efficiency, trust and transparency listed above.
But it’s also down to the fact that digital assets are attractive in their own right, especially to millennials and other cohorts who do not trust the assets that TradFi managers tell them they should be buying. Younger investors feel, with some justification, that they have been priced out of the stock and real estate markets, while simultaneously being saddled with huge debts and poor job prospects. Bitcoin and other cryptocurrencies offer an alternative means of building wealth, and have developed outside of the system that has excluded younger people. Earning crypto through side jobs or even full-time employment is an attractive option if they are in a position to save a little of their income every month.
Businesses that cater to this demand by integrating crypto payments have gained a competitive advantage over those that have not been so forward thinking, not recognising that times and preferences are changing.
