As Remote Work Goes Global, Paying Workers Gets Complex

As the idea of a permanently remote workforce gains acceptance after two years of COVID-enforced telecommuting, it isn’t exactly surprising that companies that started looking for talent beyond their own offices and cities are now looking beyond their own borders.

According to PYMNTS’ “Cross-Border Payroll And Contractor Payments Report,” between 2020 and 2021, 60% of firms said they are employing more international workers, up from just 8%, while only 14% decreased cross-border hiring. Only 1 in 5 firms reported that they hadn’t had any problems paying those international employees.

The momentum moved dramatically toward international hiring as people “came to realization that we didn’t need everybody in the office,” said Frederick Crosby, chief revenue officer of global payments platform Nium during the latest PYMNTS “On the Agenda” roundtable. “That’s great for a lot of people domestically — they have different lifestyles — but it also opened the eyes of the managers that, ‘I could find the best talent, at the best price, with the best skillset, anywhere in the world.’”

Still, it can be a traumatic adjustment, said Michael Brooks, CEO of online freelance marketplace goLance. It’s something he has a lot of experience with, having taken a subscription billing platform firm remote back in 2008 to survive the financial crisis. It’s particularly tough for “companies that deal with sensitive issues like [payment card industry] compliance,” he said. “They’ve always believed they had to have a certain type of type environment. There’s a great deal of anxiety when people first have to let go of that corporate office culture.”

It’s a 100-year-old corporate culture model that they’re abandoning, pointed out Esen Bulut, co-founder of invoicing and billing service Rimuut, which launched remote working in 2017.

The Next 100 Years

“There’s a paradigm shift here, and remote workers are the main actors of this shift,” she said. “Companies will want to be more flexible and agile … to adapt to this new open and remote talent market. Companies are no longer stuck to local talent pools. They’re free to choose location-independent professionals.”

But once forced to change that and learn that there is a way, technologically, to have a company work remotely, the attitude went quickly from “‘We’ve got to do something; we can’t have people come in,’ to ‘Oh, wait, things are better. This is a better way of life,’” Brooks said.

Employees said exactly the same thing, Bulut added, noting that they wanted flexible hours and location, personal wellness and mental health — and overall better work-life balance.

That came with a need to rethink the benefits that companies — particularly tech companies — used to build and maintain that culture, added Dan Westgarth, COO of global payroll and compliance company Deel. On-site breakfast and company gyms — what he calls “the real estate-based set of benefits” — had to make way for more creative ways of delivering “a really high standard of benefits to remote employees and remote workers.”

That can range from sending them anything from a better desk and desk chair to home cocktail kits for enjoying a remote employee happy hour, he said. But it also comes with a set of logistical challenges that come with a globally remote workforce, Crosby said, not the least of which is time zones. With team members in 13 countries, there is a need to ensure that no one’s team meeting is at midnight.

‘Pay ’Em Quick’

Paying a remote workforce is a much bigger challenge when it’s across not just one border but multiple ones. Nearly half of the respondents to PYMNTS’ “Cross-Border Payroll and Contractor Payments Report” said their biggest problem was managing taxes.

“There are a lot of different aspects of global payments that most companies have never had to face,” Crosby said.

The first is that payments have to be reliable. That may sound obvious, but as cross-border payments can come with multiday delays, you don’t want employees, or especially contractors, wondering when their check is going to arrive in the mail, figuratively speaking.

People in different countries prefer varying digital formats, he said, ranging from bank deposits and debit cards to e-wallets, and “of course they got the crypto element out there too,” Crosby said. “You want to make sure that you’re able to please your workers, at the end of the day.”

While it may be strange to think of the way employees get their paychecks as a benefit, Brooks said the speed of the payment can be “more important than the amount. You can get better talent at a lower rate if you pay ’em quick.”

That’s why a lot of remote workers choose Visa cards, Westgarth said, noting that it is one of the fastest payment networks in the world.

“The other fast payment network is, of course, blockchain and crypto,” he said. “We’re seeing more and more remote workers choose to be paid in cryptocurrency and for a number of different reasons.”

Aside from speed, in some places crypto is seen as a hedge against inflation, Westgarth added.

That may sound strange, given that bitcoin is down about 75% since November, but it isn’t for remote workers in Argentina and Turkey who are facing high-double-digit inflation. Many want to be paid in dollar-pegged stablecoins, bitcoin or other cryptocurrencies, he said.

Even though Rimuut has avoided crypto for a long time now, Bulut admitted, “It’s inevitably coming.”

Processing Speed

From the payment processors’ perspective, many companies are willing to pay for that speed, said Brooks, whose firm has a review and security period for payments.

“We’ll charge for a fee paying out extra quick, and say, ‘Hey, you qualify for getting rid of the review period,’” he said. “We take that risk, and we go … ‘We trust you enough to pay you quicker, but there’s going to be a fee.’ And then if they elevate to another status level, we remove that fee and we just automatically pay them quicker. So it becomes a little bit of a status bump.”

Those speed fees might not be feasible for a 1,000-person call center, but for skilled workers it’s another matter, Brooks said, adding that eventually clients start seeing every day as payday.

“I don’t think people are going in there thinking, how much money am I going to save,” Crosby said. “They’re going after talent, and they want to make that talent happy. It’s like, ‘How satisfied can I make my employee base? So I don’t have to go hire somebody else and go through all that churn.’”

Brooks added that hour-by-hour payments are coming. “That’s a next level,” he said. “That level of speed is highly attractive to some of the best talent in the world.”

The Regulators’ Turn

Looking back at the “Cross-Border Payroll And Contractor Payments Report,” the biggest problem reported, by nearly half of the people surveyed, was managing taxes.

“Cross-border employment and cross-border work engagement is not well understood,” Westgarth said. “The guidance and the systems and the processes that local authority and local government give” are the reason there are such big problems to solve.

Still, “As remote working becomes more quote-unquote normal, countries will catch up and will provide better tools, better processes for people to calculate taxes, pay taxes,” he added. “Ultimately it’s in the country’s interest — the country is collecting its revenue to run its infrastructure, and without collecting taxes in the most efficient way, it’s potentially missing out.”

Which doesn’t change the reality that “most countries, even the most developed ones’ regulations are behind when it comes to taxation of international hiring and the flexible workforce,” Bulut said.

But that’s changing. The payments ecosystem is growing because not only can remote workers get their money in different ways — in their bank, or in cash, or on a card and in crypto — the growing variety of services like early payment is going to allow businesses to expand and thrive “by giving benefits through different means of managing that money directly to this remote workforce,” Crosby said. “This merger, this stew of financial services all being digitally interconnected, is leading to a fantastic future.”