From Payments to Payrolls
Payments have become one of the primary early use cases for blockchain technology, with transactions now able to be executed instantly with little to no fees in a transparent manner. While traction in payments continues to grow, the space must evolve beyond simply sending currency from A to B, but include more use cases that the average person actually needs. This is where Franklin comes in. The team is building a new tool that will allow for the seamless integration of both fiat, stablecoins, and other cryptocurrency for payroll, all while being compliant with US tax law. Synergis is eager to back Franklin, whose team has extensive blockchain experience as well as an intimate understanding of the bottlenecks in the payrolls stack. We believe they are the right team to set the new standard for how the payroll industry moves to blockchain rails.
Beyond the A to B transaction…
As the diagram above from Franklin shows, payroll is much more complex than sending money via a smart contract from one wallet to another. A robust platform must account for a wide range of scenarios and outcomes that vary from employee to employee. After this initial complexity of requirements, crypto firms must also deal with regulatory uncertainty, tax implications, and a patched-together user experience, all problems Franklin solves. Employees will also benefit from the platform, with flexibility to change how and when they receive payments, as well as the ability to manually change benefits as desired.
Beyond the struggles of Web3 native firms, there is a wider addressable market in traditional payroll processors that can also benefit from Franklin’s offering. In fiat, ACH is the primary settlement mechanism. First the payroll processor estimates the invoice. This amount is debited to the company’s bank first, then takes several business days before finally hitting the employee’s bank account. This lengthy process is capital inefficient and slow, compared with blockchain that enables instant settlement and low costs that allow for more flexible payment times.
Franklin is building a hybrid cash and crypto payrolls platform:
-Pay employees in USD and/or Stablecoins
-Streamline contractor payments with an automated processing
-Real time payments — allow employees access to capital in real time rather than strictly biweekly
-Tax Compliant — Franklin produces W2 and 1099 compliant documents and manages the local, state, and federal withholdings and payments
-Pay stubs and transaction history are downloadable and plug into accounting software
Franklin is a great example of the next evolution of crypto payments. The project moves beyond simple transactions to account for real world complexity in a seamless way, while also improving the instant settlement used by the existing Web2 model. As Franklin grows beyond Web3 native projects, it can serve to be a key gateway to broader adoption, allowing employees to plug into blockchain rails and further expand the network automatically.