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The Green Sheet Online Edition

June 24, 2013 • Issue 13:06:02

Prepaid improves global payroll

sellingprepaidIn May 2013, online freelance job placement firm Elance Inc. reported a 52 percent surge over the last year in the number of professionals looking for freelance work globally and a 153 percent increase in the number of freelancers with technical skills available for hire. This massive shift in how people find work, and the resulting change in how businesses connect with them, represents an opportunity for U.S.-based financial service providers to facilitate payments internationally with payroll cards.

New York-based international payroll card manager Payoneer Inc. operates Elance's prepaid card program. Scott Galit, Chief Executive Officer at Payoneer, said Elance's statistics speak to a positive global trend. "What's happening now is that there is an increasing number of people in an increasing number of places around the world who don't have to leave home anymore in order to participate in the global economy," he said.

In the past, technically skilled but poor workers in developing countries would typically emigrate to the United States to seek a better standard of living for their families back home. But skilled foreigners, with no business connections and little English, might take jobs well below their skill levels, such as driving a taxi, because those jobs paid better than any jobs they could get in their countries of origin.

But now, with Internet connectivity around the world, that scenario is less prevalent. "I can be with my family," Galit said. "I can actually do what I wanted to do in the first place, and I can actually still earn money. But there's still a payment friction, and that's where Payoneer steps in."

Pioneer in payroll

Payoneer partnered with Elance in 2008 to transition the company away from paying contract workers with wire transfers and paper checks. Payoneer said its prepaid payroll program reduced payment access costs for workers, sped up the time it took for workers to get paid, freed up funds to be used just about anywhere in the world, and eliminated the need for workers to have bank accounts.

"In many cases, whether they are banked or not, there are advantages in terms of speed and pricing [and] transparency they can get out of receiving international payments through a prepaid card instead of to a bank," Galit said.

For workers in remote locations to simply get their pay deposited into bank accounts can be costly if performed through wire transfer. "If the average payment is less than $1000, and the cost to send it is $30 for the sender, to receive it is $30 for the recipient," Galit noted. "And then you layer on the currency conversion on top of that. You can easily be at 10 percent of the all-in of the amount that's getting paid. It can be 10 percent or more by the time the person actually receives the money into their bank account."

Payroll beyond borders

Elance's Global Online Employment Report - Q1 2013 said the freelance skills most in demand are in the creative category: writing and editing, creating infographics, video production and photography. Right behind those skill sets are those for information technology and programming. The top three hiring countries are the United States, Australia and the United Kingdom. The top three countries with the most freelance workers are the United States, India and Pakistan. Within the United States, the top three states, based on freelancer earnings growth, are Nebraska, Hawaii and Oklahoma.

Galit said Payoneer helps mostly international companies based in the United States facilitate payments for workers living beyond U.S. borders. Typical Payoneer clients have operations or partners in five to 10 countries. For Payoneer, the biggest challenge is not how to direct deposit a payment into an individual's bank account in India, but "whether you can get a payment to someone's account in India for $2.99," he said.

Galit cautioned that international payroll may not be the biggest opportunity in terms of dollar volume. However, it's a big opportunity because it's a big world. He said, "It's a different level of investment. It's a different level of complexity. It's also a different level of opportunity." end of article

The Green Sheet Inc. is now a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals. Click here for more information.

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