Companies that want to enter the crypto payroll market have a chance to get ahead of the curve as cryptocurrencies, particularly Bitcoin, approach widespread mainstream adoption.
Large organizations, though, must address several issues to make crypto payroll a viable, scalable process.
We’ll address some of the common queries concerning crypto payroll in this article. In addition, we’ll discuss some of the hurdles that payroll departments that want to enter digital currency must confront.
Benefits of crypto payroll
Cross-border payments can be done efficiently.
The Covid-19 virus has caused workforces to become more decentralized as a result of the recent pandemic.
Many large-scale companies have employees and contractors spread across the world, because working remotely has become the new norm.
Employees in foreign countries may be paid using fiat currencies, but payments often pass through third parties such as correspondent banks, causing them to take several days to appear in the employee’s account.
There may be a percentage of the overall payment value, a one-off fee, and/or a markup on the exchange rate for such payments. Their fees are not always clear up front.
Fee transparency and flexibility because of crypto payroll
Bitcoin and other cryptocurrencies can be sent around the world relatively quickly without the need for intermediaries.
A Bitcoin transaction takes 10 minutes on average to be confirmed. This is the time it takes to be added to the Bitcoin blockchain’s distributed public ledger.
The speed at which a transaction is confirmed on the blockchain is determined by the party making the payment. Bitcoin transaction fees are determined by the party making the payment. A higher fee paid will result in a higher probability of being confirmed faster by the network.
The quantity of data is what determines the fees for a transaction to be confirmed on the network, not its value.
When sending a Bitcoin transaction, the party has far more control over fees than in an international funds transfer. They can choose between speed and cost based on a trade-off.
Bitcoin transactions can be sped up using so-called layer 2 solutions like the Lightning Network.
Attracting talent by crypto payroll
Employees who prefer to be paid in crypto can be attracted by offering a crypto payroll option.
There are currently very few companies that are willing to pay even a partial salary in crypto, and therefore crypto pay is in high demand.
Giving early adopters an edge when attracting those job seekers who are interested in being paid in cryptocurrency by offering this option is a great idea.
Why do employees want to be paid in crypto?
Investing in crypto is a good opportunity
Institutions such as banks and large multinationals are increasingly accepting digital assets, demonstrating crypto’s growing presence as an asset class.
In addition to receiving stock options as part of their salary, crypto payments could soon become a normal part of flexible compensation packages. According to CNBC, this is particularly attractive to young workers.
In reality, taking a cryptocurrency salary has already become common. New York City Mayor-elect Eric Adams and several professional athletes, for example, have recently announced that they will accept cryptocurrency as a salary.
More and more cryptocurrencies are being used for payments.
PayPal and Venmo are already providing crypto payment services. Apple plans to enable crypto “tap to pay” payments by the end of 2022.
Moreover, AXA Insurance to Microsoft and even Starbucks are among the growing list of multinational corporations accepting crypto. According to a 2020 survey, 32% of US small businesses accepted cryptocurrency as payment.
There has been a flurry of activity over the last 12 months, indicating that cryptocurrencies are becoming increasingly mainstream thanks to a surge in consumer demand.
Issues with crypto payroll
When a company issues cryptocurrencies as payroll, there are several issues that don’t arise with conventional payrolls. These concerns must be carefully weighed against the advantages.
In order to identify two of the more glaring difficulties associated with paying employees in crypto, let’s begin.
The addition of overhead costs to a crypto payroll has been added.
Legacy payroll systems were not built to work with crypto. Enterprises wishing to securely store and exchange crypto, especially at large scale, will require additional software and people. It is self-evident.
Taxes and regulations on crypto are being implemented.
The specifics of crypto business and personal taxes are changing so rapidly that this article cannot cover them in detail.
Businesses should seek tax advice from a trustworthy expert in their country’s tax regulations, because they vary considerably from country to country.
Paying employees in crypto, however, requires robust and transparent reporting. There are several crypto payroll startups working in this space, including bitwage and Paymentx.
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