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What does the future hold for global payroll?

There’s a lot happening in the payments space at the moment, as the fintech boom is spawning a host of start-up companies with payments technology at their core.

Ian     Holloway
Ian     Holloway

There’s a lot happening in the payments space at the moment, as the fintech boom is spawning a host of start-up companies with payments technology at their core.


For the payroll sector though, it’s a slightly different story. Seemingly, the payroll industry hasn’t yet followed suit with the payments boom, but at some point, it will need to make a decision of whether it becomes as technologically led as the payments sector.


Will technology change the world of payroll? It’s difficult to tell, but what is apparent is that the industry at large needs to create a truer perception of the difference between a payment and a money transfer. Fintech companies operating in the payments sector have revolutionised consumer experiences – such as the introduction of ApplePay and one-touch payment systems. However, this is just a simple money transfer. A payment is a different concept with far more serious implications.


This rings true of salaries. These involve payments which carry far higher personal value both in terms of monetary significance and emotional attachment – very much bound to their reliable delivery to individuals than small, one-time purchases or transactions. When it comes to payroll payments, it’s the guarantee of the timeliness of the payment which is key; it is crucial to pay the right person the right amount at the right time.


Trusted solution


In order for technology to shape the future of payroll, however, the industry needs a reliable solution which is tried and trusted – risks can’t be taken with people’s salaries, especially when faced with the complexities and challenges of paying employees overseas and in multiple different currencies. The implications are far too significant; it’s a very risk-averse environment to be operating in.


If there is a guarantee that transactions will be reliable and accurate, then new technologies could come into play, but the industry will almost certainly lag behind the curve because of the sensitivities around salaries. Plus, there’s a cultural/behavioural anchor which may prevent too much innovation in the payroll sector – for example, we are all still using the SWIFT payment method, which was developed in the 1970s. Why? Because it works. There has been little requirement to change this.


There is a degree of evolution and innovation but it’s slow to materialise – but it doesn’t necessarily mean the payroll industry will never move forward into the fintech space. In the international payments landscape there’s definitely a shift away from traditional currency converters towards more payments specialism, especially as organisations are tending to centralise payroll functions.


International payments are even more complicated – salaries are serious and shouldn’t go wrong. When you start to look at paying employees overseas, there are a whole host of complications outside of the physical transaction itself, such as counter-terrorism financing and anti-money laundering. As soon as the money crosses an international border there is legislation in place that isn’t in place for domestic payments within the UK, which can cause unexpected delays and obstructions.


Some countries have statutory deductions taken from salaries and some require payments to be made from within the country. There are also additional challenges around different time zones and the different jurisdictions of in-country banking infrastructure. The challenges of global payments are plentiful, and suddenly it becomes even more of a challenge to pay the right person the right amount at the right time.


Companies also need to bear in mind the value of accurate payment delivery – if there is an error, it’s not only at a cost to the company, but it’s also a cost to the reputation of the company and a risk to employee retention.


This is where technology is definitely improving the experience, though. There has to be knowledge behind the tech to deal with in-country rules and regulations, which opens up more accessibility to global workforces. What’s more, technology provides increased accuracy, transparent pricing, security and guaranteed delivery.


Global landscape


Technology is also changing the way global payments are made in terms of resource and efficiency. Relying on banks to process the payments is one thing but for HR and payroll to input large volumes of data in order to make payments to multiple countries around the world is a challenge, and involves a higher risk of human error. Financial technology solutions offering slicker and more time/cost efficient methods of data uploading are changing the landscape for global payroll companies. Technology as an enabler of high volume, multi-national payments is reducing resource costs and the risk of errors.


Errors are a costly business for companies and automated verification processes can virtually eliminate the chance of payment mishaps.


Clearly there is a role for technology in payroll payments and it is happening on a small scale, but the industry still has a long way to go if it wants to catch up with everything that’s happening in the wider payments industry.


But the age-old adage of “if it’s not broke why fix it?” comes into play until the new technologies have found their feet.

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What does the future hold for global payroll? What does the future hold for global payroll?
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