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Wednesday, April 12, 2023

Green Sheet interviews global payouts leader Nick Baum

In a recent interview, Nick Baum, co-founder and CEO of Tremendous, discussed global payouts with The Green Sheet, citing a study by Grand View Research that shows a compound annual growth rate of 17.6 percent for this $4.7 trillion dollar market between 2021 and 2028. In addition to reflecting on his company's journey, he shared insights on growth and best practices among service providers in this sector.

What factors are contributing to growing interest, adoption and usage of global payouts?

I think growing interest in and adoption of global payouts can largely be attributed to where we're at in the evolution of work. The pandemic marked an inflection point—suddenly, with most companies working remotely, organizations realized they could hire from anywhere.

Companies now employ more remote and global workers than ever before. And just like they would in the office, they need to recognize and reward these employees for hitting performance-related milestones, for the holiday season or for big life events, like birthdays and work anniversaries. And, in my estimation, this will only continue to proliferate moving forward. The future of work is flexible and remote. And consequently, it's global.

In addition to offering global payouts for employee recognition, companies are also increasingly using the internet as a marketing and customer acquisition growth channel. The internet, of course, also crosses international borders. Now that companies are marketing their products and services online, they're able to acquire global customers. And many are using incentives as part of their customer acquisition plan. So having the option to send payouts globally is important for supporting online marketing strategies. 

Similarly, as more companies acquire global customers, UX researchers that want an accurate picture of the customer experience across their client base need to be able to recruit international participants. This makes global payouts an integral part of the research process.

What attracted you to this area and what problems do you solve?

Tremendous started as a peer-to-peer gifting company about 12 years ago. We were called GiftRocket then. Over time, we had big enterprise customers come to us that were looking for an incentive payment solution. Spotify, in particular, came to us to do survey incentives and enterprise payouts.

At the time, they were conducting research in Sweden, Australia and other geographies. So we built a global payment solution to fit their use case. Ultimately, our global payment solution ended up being helpful for other large and small-to-medium sized businesses. 

The problem we solve is simple: we help companies pay people. Surprisingly, when GiftRocket launched, legacy payment companies like PayPal hadn't found a way to solve for this. Payroll companies didn't really have a seamless solution, either. It's very difficult to use those services to pay individuals with whom the sender doesn't have an existing relationship. So we stepped in to fix this problem.

What attributes should enterprises look for in a global payouts platform?

There's a few big things I would emphasize as being important for enterprises. First, it's important to find a solution that offers plenty of redemption choices to recipients. There's been a significant increase in new digital payment options, like Visa and Mastercard gift cards, ACH transfer, PayPal, direct deposit, etc.

Some of these payment options work in certain countries, but not others. For example, PayPal has a high adoption rate in the United States, but is less popular in some other countries. That's why it's so important to give recipients a choice of options so they can find the one that works best in their country. 

Another necessity is language translation. If you're paying employees, research participants or sales prospects around the globe, you want to be able to present their payout in the language they speak. A payouts platform that offers currency conversion information in the interface is also helpful. You need to know how much money you're actually sending someone in their local currency. This prevents you from over- or under-paying.

Finally, it's important to choose a platform that has great customer support and self-service support tools. This is true across the board of any enterprise application businesses adopt. It's inevitable that you'll run into a snafu or a complicated edge case at some point. It's just good to know that your platform offers great customer support, or gives you the tools to handle issues yourself.

What are some considerations about achieving and maintaining compliance in a fragmented regulatory landscape? 

There's two main considerations companies should make: first, they need to make sure they're licensed to send payouts in certain geographies before sending an incentive, recruiting a research participant or hiring international employees from specific areas. In the United States, you're required to work with a bank partner to handle global payouts, or get licensed on your own. We work with a bank. 

Second, companies need to be mindful of tax compliance-related issues. We help companies with tax compliance by streamlining the collection of W-9 and TD1 documents, which are required for anyone receiving payment greater than a certain amount in the United States and Canada, respectively. 

What trends are you seeing in the space, and how do you expect them to shape future payouts?

The biggest trend I see is that more and more companies have more international employees, customers and partners than ever before. This requires companies to have more payout options across even more geographies. As these options grow, it's important for companies to stay flexible and holistic in their approach to global payouts. 

What are your predictions for global payouts in 2023 and beyond?

I predict that more companies that have been trying to manage global payouts on their own will turn to payouts platforms to simplify their operations. Doing global payouts ad-hoc or DIY is not sustainable or scalable. Maintaining compliance, providing recipients with plenty of redemption options, and accounting for conversion rates is a lot easier to do with a payouts platform than it is to do on your own. end of article

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