Digital asset payroll disbursement is here. But who is likely to take it up? We foresee four groups:
- Large companies with extensive staffs based across multiple countries
- Very small companies with exclusively-distributed teams, where lightness is at a premium
- High-income individuals who seek money management and investment opportunities. Typically based in the developed world, these people may seek to invest some or even all of their salary payments
- Employees in the developing world. Underbanked, underserved by credit and financial institutions, and with reduced access to conventional infrastructure, such employees may see strong appeal in bypassing traditional systems entirely
We’ll look at these in more detail, starting with our first group.
Digital asset disbursement for large companies
Statista classes large companies as firms with over 250 employees, and says there were about 600,000 of them worldwide as of 2020. For these businesses, payroll disbursement can involve multiple pay scales, pension allocations and other payments, even if the company’s staff are all based in the same country. When staff are distributed across jurisdictions, the problem can be worse. For example, imagine a company with some staff in California and others in Texas, where labor laws and taxes are very different. It doesn’t need to be a different country to be inconvenient and difficult.
Actual payroll calculations are only part of the process; disbursement can be convoluted, since it involves multiple financial institutions. Banks have to work together, across national borders, to move money around and convert it to local currency. For a company with 250 employees — or, like Walmart, 2.1 million — the associated efforts and fees add up quickly. For companies like these, minor efficiency savings per unit could become major savings quite quickly. Imagine saving Walmart a dollar per employee per month: that’s $25 million a year.
Digital assets disbursements can save a company like this money in two key ways: by saving time, which needs to be paid for, and by saving money outright. While the big problems of payroll management — legislation and regulations, managing a staffing and payroll technology stack, and handling the requisite volume of data accurately — can’t be cured directly by digital assets disbursement, their effects can be reduced. Specifically, you can reduce fees and costs associated with international money transfers, and cut down the number of worker hours devoted to managing payments. In addition, digital assets disbursement can reduce the size of a company’s payroll stack and bring more of the payments process under your control.
How can the same tool also be useful for smaller businesses?
Disbursements for startups, agencies and smaller businesses
When we say small businesses, we don’t mean what Americans call ‘mom and pop’ businesses — one or two people, with relatively low revenue and no plans to expand. We’re referring to businesses with few employees, but relatively high revenue. That can be recent startups or scaleups, agencies, or businesses that handle high-ticket clients or large volumes of clients with a small staff.
If your company has, say, fifteen employees — a safe prediction for a scaleup, according to OECD definitions — you’re not likely to struggle with payments in the same way as a very large organization. However, many such organizations have distributed teams, and a smaller number of higher-paid staff. Initial funding rounds are often quickly followed by a relatively small number of VP or C suite hires that pay much more attention to fit and function than to location. In many cases, if you’re in Albuquerque and your best VP sales hire is in Bangalore, that’s who gets the job. Zoom and the rest of the remote-working toolkit takes care of the rest.
Making disbursements across multiple jurisdictions is a pressing challenge. You’re also much more likely to have staff who may want to take remuneration in more than one format, so digital assets disbursement can solve some of your biggest problems immediately. It can also make paying agencies and contractors easier and less expensive. Compare the fee schedules of banks, non-bank payment options like Paypal, and a digital assets disbursement tool like Stubs to see the kind of difference it can make.
However, a rapid, low-cost and versatile disbursement tool isn’t just of interest to employers. What if you are that Bangalore-based VP of sales?
The high-paid investor
VP and C suite positions in fast-growing scaleups often pay around the $100,000 per year mark. Higher ranks inside major corporations can be much higher than this, and pay can include deferred compensation, stock options and other benefits. Individuals who are compensated this way often invest a significant portion of their incomes into either safe-haven investments or stocks that are likely to show significant growth, such as tech stocks which they are often uniquely placed to choose accurately.
For such people, the appeal of being paid in digital assets is clear. They can make investments through digital assets exchanges rapidly and easily, and choose to make withdrawals in reserve currencies like the euro or dollar as well as into their own national currencies. They also have access to a growing suite of digital asset financial services. These are crucial interests for highly-paid and ambitious individuals, often looking to build generational wealth.
The underbanked remittor and local investor
Another key group we identified is the employee with poor access to banking, credit and infrastructure. In some locations, being unbanked is the norm and key infrastructure is either difficult to access or absent. In addition, there are nations whose national currencies are weak or whose states are unstable or unreliable. If you live in such a place, or your family does, and you’re earning money, what should you do with it?
We can look to how such problems have been solved in the past, to see how they might be solved in the future. In Africa, conventional infrastructure has been effectively bypassed. Rather than use copper wires, which in the developed world were built for 19th century technologies like the telephone and in Africa were not built, many Africans leapfrogged to mobile. Might they, and other underbanked people worldwide, leapfrog to digital assets technologies and bypass the conventional banking system entirely?
It’s easy to imagine, but it’s not necessary. We can also look directly at the track record of digital assets technologies in largely-underbanked locales. While several African fiat currencies lost significant value during the period 2015–2020 (such as the Nigerian Naira, which fell by 25% against the US dollar during this time), digital assets soared. In the year to June 2021, digital assets growth in Africa was 1,200%.
While in Africa, remittances have fallen, contributing to economic woes in many African countries and particularly in Nigeria, they remain a key consideration both in many Asian and South American countries. With significant costs associated with international bank transfers for consumers, digital assets exchanges are often preferred.
Conclusion
The four groups identified in this post don’t all have the same interests. But they all have good reason to be interested in a tool that lets companies pay their staff in digital assets, quickly and efficiently. If that tool also serves as a gateway to the digital assets financial ecosystem, so much the better. And as we build out our own digital assets disbursement tool’s features, we expect to see more users interested in a digital assets pension, or in using the platform to invest — whether that’s in local businesses or billion-dollar scaleups, or both.