Payments

Growing Gains: How Global Workforce Payments Can Facilitate Growth

A new J.P. Morgan report details five overarching payment themes businesses should focus on in the coming years. Papaya Global's payroll and payments platform addresses them all

Table of contents

Key Takeaways

  1. In recent years, businesses have been forced to adapt to an unstable business environment and shifting economic conditions. According to some analysts, these changes are just the beginning of a new, rapidly changing era.
  2. J.P. Morgan’s Forecasting Payments webinar breaks down the drivers of growth in uncertain times: optimizing core treasury functions, driving incremental revenue via technology, using financial services to elevate ecosystems, supporting inclusion by addressing workers' financial needs, and leveraging data to glean insights into spending patterns.
  3. Clients of Papaya Global, the only unified payroll and payments platform, turned workforce payments from one of the least efficient organizational processes into a growth driver.

First came COVID-19. Then the war in Ukraine, energy prices rising to near-record levels, soaring interest and inflation rates, and a banking crisis. After three volatile years, even the most optimistic analysts acknowledge that the world seems trapped in permacrisis, adversely affecting the macroeconomic environment.

The bad news is that there’s no end in sight. ”Crises such as we have experienced in recent years will occur more frequently in the future,” said Jörg Tüllner, Lead Partner for risk consulting at PwC Germany. “When disruption is part of everyday life, the ability to adapt and respond to disruption is critical.”

One response to these global changes, illustrated by J.P. Morgan’s Forecasting Payments webinar, is simply accepting them and undergoing a paradigm shift. “We recognize these changes are just the beginning of a new fast-paced, rapidly-changing era,” write the authors of a recent report titled Five Payment Trends for Growth based on Current Conditions. They go on to analyze the overarching themes businesses should keep in mind in the coming years.

The themes are:

Protecting the core

A turbulent economic environment is bound to impact businesses’ liquidity and available working capital. Amid rising inflation and interest rates, notes J.P. Morgan’s report, “treasurers must optimize their fundamental working capital operations, understanding it’s no longer an option to leave money on the table.“

One area where organizations are leaving money on the table is global workforce payments. Payment service providers (PSPs) typically demand large deposits – as high as 30% of the payroll run – to cover unexpected fees accumulated en route to workers’ bank accounts. In addition, PSPs require that organizations reserve their funds early in the payroll cycle, tying up working capital unnecessarily.

Papaya Global, the only unified payroll and payments platform, took a different route. Unlike other PSPs, which deliver wages and salaries via traditional rails, Papaya built the world’s first workforce-dedicated rails. On Papaya’s rails, all fees are known in advance, allowing businesses to fund their accounts much later in the payroll cycle, put down smaller deposits, and increase their working capital.

Treasury as an influencer

Now more than ever, it’s vital that treasurers drive incremental revenue for their organizations. According to J.P. Morgan, the best way to do that is by using technologies that “can offer payments-related and growth-focused innovations,” such as wallet solutions and cross-border FX payments.

Papaya’s growth-focused innovations address both. Our transfer processing algorithm accounts for exchange rate fluctuations as late as possible in the payment process, reducing currency conversion costs to a minimum. Plus, our Workforce Wallet – the latest innovation in Papaya’s suite of enterprise-grade solutions – accelerates global payroll payment processing by 80% and reduces bounced payments to less than 0.1%.

Innovation through ecosystems

To offer a more customer-centric experience, states J.P. Morgan’s report, businesses today create end-to-end journeys that have “evolved from platforms and other channels into fully integrated ecosystems.” Interestingly, a similar process happens internally; as technology enables new forms of work, and roles become more project-based, workforces are evolving into workforce ecosystems.

A workforce ecosystem consists of both internal and external contributors. Organizations increasingly depend on external contributors – such as long-term contractors, freelancers, and gig workers – to meet their objectives. External workers produce at least 30% of the work in roughly half of the organizations. In some industries, like tech, external workers account for up to 50% of an organization’s workforce.

Unfortunately, paying external workers remains challenging for many organizations. This is where Papaya Global, whose offerings include an end-to-end contractor management solution, comes in. As a regulated financial services company, Papaya enables compliant workforce payments everywhere. And our unified platform allows us to charge the lowest possible rates for contractor management.

ESG: From promise to impact

Research conducted before and during the pandemic revealed a strong business case for diversity, equity, and inclusion (DEI). In 2019, companies in the top quartile of ethnic and cultural diversity outperformed those in the fourth one by 36% in profitability. The following year, companies with over 30% of board seats held by women outperformed their less gender-diverse counterparts in 11 out of the top 15 S&P 500 sectors.

It should come as no surprise, then, that J.P. Morgan implores businesses to “transition from ESG (environmental, social, and governance) ideology to practice.“ One way to do that, notes the report, is to focus on the social aspect of ESG by considering the needs of gig workers. Many of these workers are part of financially underserved communities, which means they lack, among other things, pay transparency and access to payment information.

Fortunately, new technologies can remedy that. One of them is Papaya Personal, Papaya Global’s new mobile app. The self-service app allows workers to stay on top of their finances by giving them access to payslips, work documents, and Papaya’s support team, providing more visibility and control over their income and alleviating some of the stress for financially underserved workers.

Certain uncertainty

While the current economic environment creates uncertainty, it also offers opportunities for innovation. According to J.P. Morgan, one opportunity is using the data provided by payments to glean insights into spending patterns. “Once a business is equipped with the right information,” states the report, “they can move forward with innovating.”

A recognized innovator, Papaya Global offers businesses an in-depth analysis of payroll and payments data via its out-of-the-box dashboards. Clients can see workforce expenses per country, team, or project; compare them on a quarter-by-quarter basis to identify changes; monitor which location is providing the highest ROI; and forecast future costs of any employee based on salary updates, bonus payments, annual raises, and more.