Is crypto the future of payments?

06 April 2022

HM Treasury has announced plans to make Britain a global hub for cryptoasset technology and investment. Part of the plan is to bring stablecoins – cryptoassets intended to maintain a stable value linked to fiat currency – within regulation so that they can be used for payments in the UK. This could potentially change a lot in the payroll industry. 

Here are a few different ways blockchain technology could affect payroll payments:

•    Speed: Currently banks move money between employers and employees, and they can take time to do so. This is especially true for international payments to expatriates where money travels from one banking system to another. Blockchain technology could allow employers to make faster transactions which could introduce more flexibility to the payroll cycle

•    Security: Banks store information about each account, and even though they are trusted as a third party, their involvement increases the possibility of fraud or data breaches. Blockchain technology would provide a simple model where data is encrypted and completely anonymous to those who aren’t directly involved in the transaction. The distributed ledger technology is designed to make it virtually impossible for intruders to falsify content

•    Transparency: As the transaction is instant, blockchain technology allows the exact status of the payment to always be known. There is never a moment in which the money is neither in the employer’s account nor the employee’s

•    Accessibility: The simple process of creating a digital identification to receive payments could make it a lot easier for employees to receive payments even if they do not have a bank account

•    Costs: With fewer parties involved, the transaction fees would be much lower. Additional fees from the bank to convert currency for international payments would also be eliminated, and employees could choose the time they want to convert the currency based on the changing exchange rates.

The policy team will be keeping an eye on the latest developments and will report on anything that will impact payroll professionals in this area.

Information provided in this news article may be subject to change. Please make note of the date of publication to ensure that you are viewing up to date information.