Businesses today are understandably nervous about holding their funds in external institutions. They prefer to use bank accounts. US banks are insured by the Federal Deposit Insurance Corporation (FDIC) and other countries have similar government-backed protections.
Banks operate under strict supervision. The banking license they hold permits them to carry out financial operations such as lending money, charging and earning interest, and issuing credit cards.
A bank account is an all-purpose financial vehicle. But for specific operations such as global payroll payments, a banking license is not what’s needed. Today, there are better options that were designed specifically for certain tasks.
For payroll payments, a company like Papaya Global, which holds money transfer licenses around the globe, offers a quicker and more efficient solution using optimized payment rails created especially for that purpose.
What is a money transfer license?
While banks remain the foundation of the financial world, the pace of modern business (as fueled by technological growth) demands new, more agile financial solutions. That role has been filled by fintech companies like Papaya Global.
Finance today can be seen as a series of layers built on top of traditional banks. Papaya operates at the layer just below the bank, a layer that requires its own license – known as the money transfer/payment service license – granting Papaya the right to hold and transfer funds.
Money transfer licenses are issued by local regulators and come with intense government oversight. They fall under the same category as banking licenses but are narrower in scope. They do not allow the full range of banking operations, but they authorize companies like Papaya to upgrade the delivery of payroll payments.
What makes Papaya different from other payroll companies? We are globally licensed to hold and transfer funds for all your payroll needs – which means that you can pay your global workforce in the fastest possible time, even in countries where you don’t have a bank account.
The licenses do not allow Papaya to lend money or offer interest-earning accounts. Papaya virtual wallets are designated exclusively for making payments, not receiving payments. Papaya must also adhere to the following requirements:
Segregation of Funds – Papaya cannot take money from one client and combine it with funds from another client and use that money for its own advantage. All the funds must be kept in separate wallets, with full client accessibility. From an accounting point of view, the financial assets still belong to the client, not Papaya, even though the funds are held in Papaya’s wallets.
Audit – Papaya undergoes the strictest supervision of its handling of client funds. Financial transactions are monitored regularly, ensuring the highest levels of trust.
All funds backed by regulatory standards
Uniquely positioned in the global payroll space, Papaya is a regulated financial services company via its subsidiaries. We maintain client money accounts (CMAs) with J.P. Morgan and Citi.
To carry out payments, companies can fund their e-wallets in seven currencies and can pay out in over 100 currencies. This is done through the different IBAN numbers we issue to each wallet.
Papaya’s e-wallet is designed specifically to leverage our licenses so we can focus on global payroll payments, ensuring that all nuances of the payroll process are handled with care, such as timeliness, accuracy, no hidden fees, ultimate debtor identification, and more.
As a regulated entity, we are obligated to perform KYC (know your client) checks within our dedicated compliance team – a process we can fast-track within seven days thanks to our dedicated solutions and established relationships with major banks.
What allows us to fast-track the KYC is our complete control of the payroll payment process. We allocate the IBAN, design the payment rails, and accept liability for the payments – all while adhering to the bank’s rigorous regulatory standards.
Most importantly, these regulatory licenses allow us to provide something you can’t put a price on – peace of mind to employers dealing with payroll payments across multiple regions as we facilitate payroll payments end-to-end, in one place, with global expertise and full liability.
To learn more about how Papaya can transform your payroll and payments, contact us for a demo.
