Crypto Payroll Services Are On The Rise. Will They Boost Bitcoin Adoption?

Bitcoin payments and transactions in other cryptocurrencies are still rising only modestly, yet there are signs that their wider adoption may be accelerating. On November 12, payments processor BitPay announced the launch of BitPay Send, a new payroll service that enables organizations to pay employees and workers using cryptocurrencies.

Combined with other companies that have expanded their crypto payment options in recent years, this growth in crypto payroll services suggests a significant boost for cryptocurrency adoption. They remove the custody barrier that had prevented companies from paying in crypto in the past, and in the process they make it likelier that companies will use crypto to pay employees that would prefer bitcoin over U.S. dollars, euros or British pounds.

Crypto Payroll Removes Barriers to Bitcoin Adoption

As BitPay CEO Stephen Pair explained when announcing the launch of the service, BitPay Send’s main innovation is that it removes companies from any risk of holding cryptocurrencies themselves.

“With BitPay Send, companies can make mass payouts without having to buy, own or manage crypto and their recipients receive payments quicker and at a lower cost,” he said.

This not only makes paying workers via crypto easier and more straightforward, but it protects companies and organizations from volatility, which has long been perceived as a major block to adoption. This is something cited as important by Dan Sapozhnikov, the president of advertising company AdGate Media, which is one of the first firms to use the service.

“We have lots of affiliates who wanted to be paid in Bitcoin, especially those who are based outside North America and Europe where access to bank accounts is difficult. One of our biggest challenges is that we did not want to buy and hold crypto and having BitPay manage that risk was an important factor in choosing BitPay Send,” he said.

Another advantage of BitPay Send is that recipients of payments don’t need a bank account, only a BitPay ID and cryptocurrency wallet. So in addition to lowering barriers for companies, the service also has lower barriers of entry for users.

Taken together, this could all mean that BitPay Send ends up becoming a big booster of adoption, particularly in countries with significant proportions of underbanked consumers and workers.

Source: Global Findex database

On The Rise

It’s also encouraging to note that the launch of BitPay Send comes amid a gradual rise in payroll services which offer cryptocurrency options.

In fact, only a day after BitPay announced the service’s launch, rising payroll startup Deel introduced its own cryptocurrency payroll functionality. This lets employees (working for companies that use Deel) withdraw their monthly paychecks into cryptocurrency, with Deel partnering with Coinbase to provide the service.

Again, this helps companies avoid the risk of holding crypto themselves, while the service also helps employees bypass Swift for international payments, which reduces fees and (in certain cases) compliance requirements. Deel is still a startup, but is growing quickly: it currently works with 500 companies in over 140 countries, and closed a $30 million Series B fundraising round in September. In other words, its rollout of this service is another boost for crypto.

Major payment firm Square also offers something very close to a bitcoin payroll service, in that its Cash App has since 2018 enabled direct paycheck deposits that can be converted into the cryptocurrency.

Another payroll firm that’s growing quickly is Papaya Global, which raised $40 million from VC investors, also in September. It currently operates in over 100 countries, and in December 2017 it became one of the first major operators to offer cryptocurrency payments for employers to employees.

Source: Twitter

Lastly, the first prominent company to provide crypto payroll services was BitWage. It launched a bitcoin payroll service back in 2014, and has since grown steadily, hitting a monthly volume of $2.5 million in early 2019 and serving over 30,000 employees and contractors. It now includes payment options in bitcoin cash, ethereum, and USDC.

Network Effects

As a whole, the existence of such companies and services indicates that the ability to pay workers via cryptocurrency is now becoming more widespread. As the cryptocurrency market grows and matures, there will be a greater demand from workers for payment in crypto, while the increasing credibility of crypto will also encourage a greater number of companies to use BitPay Send, Deel Crypto, BitWage, or whoever else.

Of course, we need to remember that this is all still at an early stage. The likes of BitPay Send and Deel Crypto have only just launched. At the same time, BitWage was boasting of a monthly volume of only $2.5 million in 2019, while ADP — probably the largest payroll company in America — garnered a whopping $14.17 billion in revenue in 2019 (i.e. about $1.18 billion per month, or 47,100% more than BitWage’s monthly turnover).

We therefore shouldn’t get ahead of ourselves. But with a growing number of payroll services laying the foundation for more and more companies to pay employees in crypto, we’re likely seeing the beginnings of increased cryptocurrency adoption, as a means of payment as well as a store of value.