American firm Bitwage has created Bitcoin’s first, formal Bitcoin payroll service. Jonathan Chester and John Lindsay founded the Palo Alto, California-based company because of issues they saw in the Bitcoin industry. As the founders note on their website, currently the only way to attain Bitcoin in a scalable, reliable manner is by connecting a bank account provider or using cash. “With Bitcoin Payroll, people all around the world have the opportunity to access the global digital marketplaces without having to go through banking intermediaries,” say Chester and Lindsay.
So why should people use Bitwage?
Chester and Lindsay say they provide a full service to employers that makes paying Bitcoins to employees — in particular international contractors — simple, fast, and convenient. As described on the company’s website, Bitwage intuitively captures staff percentage and wallet preferences for employers, saves the payroll provider or administrator time and money by getting this information every pay period, and offers integration with current payroll software. For employees, Bitwage is providing a low-friction method of attaining Bitcoins.
Chester and Lindsay told CoinReport:
“With Bitcoin Payroll, we source (Bitcoin liquidity providers) from several different sources to mitigate the risk of a single point of failure, your account verification has already been done by your employer, and your bitcoins arrive reliably in every pay period. The exchange fees will also be passed on mostly, if not entirely, to the employers for the service we are providing (similar to only fiat payroll companies). This means that employees will receive cheaper bitcoins.”
On July 21st, Bitwage will release a private alpha service, which has been created with small businesses such as start-ups in mind. The service is designed to minimize the time, effort, and room for human error in Bitcoin payroll. With payroll looked after, say Chester and Lindsay, founders and staff of small businesses can concentrate on generating sales and development. Bitwage says its solution is ideal for businesses paying international employees and 1099 contractors. The company plans to implement W2 Bitcoin Payroll tax calculation and withholding by the end of 2014.
Bitwage is also working on developing “the fastest, cheapest and easiest system for paying international workers.” The company notes that many businesses pay international workers on a 1099 basis, a process described as slow, costly, and difficult to navigate.
Bitwage founders said:
“With Bitcoin as the underlying technology, we plan to allow companies to pay 1099 international workers through us in their fiat currency and paying out to the employees’ fiat currency on the other end.”
Chester and Lindsay have encountered some obstacles since they began working on this project last November. They note that a lot of conservative banks fear taking the leap with respect to Bitcoin; however, Bitwage was fortunate in securing an American bank for its services. The founders have also had difficulty working with payroll firms, which are worried about the risk involved with the Bitcoin sphere. But Chester and Lindsay are confident they have crafted a strategy that will allow their company to offer full payroll tax services soon.
The next step for Bitwage is to develop the infrastructure for international contractor payments where neither the employer nor the employee must touch Bitcoin if they don’t want to. The company is starting to foster relationships with exchanges and liquidity providers in regions such as Asia and Latin America. Bitwage is also looking to expand its workforce, seeking passionate and experienced technical, sales, and compliance team members to help the firm bring the highest quality product to its customers in the coming months and years.
Bitwage is currently a self-funded firm, but Chester and Lindsay are speaking with investors and plan to launch a seed round this fall.