Latest / Fintech Conversations with Fexingo: Banking, Payments, and Financial Software Companies / How Fintechs Are Using Crypto for Cross-Border Payroll
Transcript
- Lucas: We talk a lot on this show about how fintechs are reimagining payments for the consumer, but there's a whole other world of B2B payments that's quietly getting a crypto upgrade. Specifically, cross-border payroll. Luna: Yeah, because if you're a company with employees in three different countries, traditional international wires are slow and expensive. Lucas: Exactly. So some fintechs are now enabling employers to pay remote workers in stablecoins or even Bitcoin. The promise is near-instant settlement at a fraction of the cost. Bitwage has been doing this for a while, and more recently, platforms like Deel have added crypto payroll options. Luna: Is this mostly a play for cost savings, or are there other drivers? Lucas: It's partly cost, partly speed, and partly access. A typical wire transfer from a US company to a contractor in the Philippines can take three to five business days and cost two to four percent in fees plus FX spreads. With crypto, the transfer can settle in under ten minutes for a fraction of a cent—if you use the right blockchain. Luna: But Bitcoin takes longer than that, right? So are they using Bitcoin or stablecoins? Lucas: Good question. Most companies use stablecoins like USDC for the actual transfer, because they settle quickly and hold a constant value. Then the worker can either keep it in USDC or convert it to local currency or Bitcoin. So the volatility is optional. Luna: And the employer never touches volatile crypto—they just buy USDC on an exchange and send it. Lucas: Right. The employer incurs the cost of converting dollars to USDC, which is minimal—often under 0.1 percent—and then the transfer fee on-chain might be a few cents. So the total cost could be under 0.5 percent, versus 2 to 4 percent for traditional methods. Luna: But what about compliance? If you're a US company paying a contractor in Argentina, you still have to report that to the IRS and potentially deal with OFAC sanctions screening. Lucas: That's the part that's not fully solved yet. The fintechs handling the payroll have to handle KYC and AML on both ends. Bitwage, for example, registers the employer and the worker, and they keep records of each transaction in fiat equivalent for tax reporting. So the worker gets a traditional W-8 or 1099 form, even though the actual transfer was in crypto. Luna: So the employer doesn't get to bypass reporting—they just get a better pipe. Lucas: Exactly. And that's why it's mostly attracting companies that already have a global remote workforce. One case I looked at: a 50-person startup with engineers in Nigeria, Brazil, and Ukraine. They switched from wire transfers to USDC via a payroll platform and saved about $12,000 a year in fees and FX costs. Plus, their employees got paid in hours, not days. Luna: That's a real chunk of change for a small company. And for the workers in places like Nigeria, where the local currency has been depreciating fast, getting paid in a stablecoin might actually be a value preservation strategy. Lucas: That's a huge angle. In countries with high inflation or capital controls, having the ability to receive a dollar-pegged asset and then convert it on your own terms—using a local exchange or P2P—gives the worker more control. Some workers even choose to hold part of their salary in Bitcoin as a savings vehicle. Luna: But doesn't that create a double tax event for the worker? If they get paid in USDC and then convert to Bitcoin, that's a taxable exchange in many jurisdictions. Lucas: It does. And that's one of the friction points. The tax treatment of crypto payroll is still messy. In the US, the IRS treats crypto as property, so each payment is a taxable event at the fair market value. If the worker immediately sells or converts, there's a second event. Some payroll fintechs are trying to automate the tracking, but it's not seamless yet. Luna: So it's more of a fit for workers who are comfortable with that complexity, or for jurisdictions that have clearer crypto tax rules, like Portugal or Singapore. Lucas: Right. And that's why the adoption is clustering in certain regions. Latin America and Southeast Asia are the hot spots right now. In Brazil, for example, the central bank has been pretty forward-leaning on crypto regulation, so it's easier for workers to onramp and offramp. In contrast, India's tax regime is punitive—30 percent on crypto gains—which discourages usage. Luna: Are any traditional payroll giants like ADP or Paychex moving into this space? Lucas: Not directly yet, but they're watching. I think the bigger near-term shift is that newer, global-first payroll platforms are making crypto a standard option. Deel already offers it in over 150 countries. As more companies adopt a 'remote-first' hiring model, the demand for instant, low-cost cross-border payroll will only grow. Luna: And the fintechs that can solve the compliance piece cleanly will have a real edge. Lucas: Totally. Now, one thing I want to be clear about—none of this is investment advice. Crypto still carries risks: smart contract risk, regulatory shifts, network congestion. But as a payment rail for payroll, it's increasingly viable. Luna: And that's a different conversation from 'crypto as an asset class.' Lucas: Completely different. It's just a better pipe. And if these conversations are useful for what you're building or running, we hope you find them valuable. We keep this show ad-free by design—no sponsors, no commercials. If that model resonates with you, you can support it at buy me a coffee dot com slash fexingo. That's it. No pressure, just an option. Luna: Yeah, we appreciate everyone who listens. And it's nice to know that some folks find it worth supporting. Lucas: Alright, back to payroll. So where do we see this going next? I think the next frontier is integrating crypto payroll with decentralized finance protocols to offer yield-bearing payroll accounts. Imagine a worker gets paid in USDC, and that USDC automatically goes into a lending pool earning three or four percent APY until they withdraw it. Luna: That would be a game-changer for workers in countries where bank savings accounts pay zero percent or even negative real rates. Lucas: Exactly. And some fintechs are already experimenting with it. They'd offer a 'payroll account' that's really a smart contract that splits the incoming payment into a spending portion and a savings portion. The savings portion goes to work in DeFi. The user gets a debit card linked to the spending portion. Luna: But that introduces more smart contract risk and complexity. How do you explain that to a non-crypto-native employee? Lucas: You don't have to. The fintech abstracts it. The employee just sees a balance that earns interest. The underlying tech is invisible. That's the whole point of good fintech—make the complex simple. Luna: So we're moving toward a world where your salary arrives in seconds, costs pennies, and starts earning yield automatically. Lucas: That's the vision. And it's not science fiction—the building blocks are already here. The question is which fintechs will wire them together in a compliant, user-friendly way first. Luna: And whether regulators will let them. Lucas: Always the big variable. But for now, crypto payroll is a concrete, working use case that's saving businesses real money and paying workers faster. That's worth paying attention to. Luna: Agreed. Great topic.