Payroll is complicated and complex. But like everything else in finance, it can be embedded into an existing software operation. One of the leaders in embedded payroll is Check, a fintech that has pioneered this new niche.
Today, Check has announced three new tools to make launching payroll easier for software platforms.
First, let’s give a little background on Check. Founded by Andrew Brown in 2019 he saw a gap in the market where companies would like to offer payroll services to their customers but there was no easy way to achieve that.
Let’s be clear right off the bat. This is not about offering payroll directly to small businesses. This is about offering a white-label payroll platform for companies wanting to offer a paid payroll product to their customers. It is a way for companies to monetize a customer base with a new revenue stream.
Check went ahead and built the complex payroll infrastructure to create their platform that can be used by any software or staffing platform.
It started with Homebase, an employee scheduling and time-tracking tool that wanted to offer payroll services. They were Check’s first customer and are still a customer today.
Embedded finance is one of the hottest trends in fintech. We started with embedded credit cards, then came payments, lending, bank accounts, insurance, investing and now we have embedded payroll.
While the market may not be as broad as some of the other verticals right now, payroll is a massive business. If it becomes a simple process to offer payroll services, we could well find that the market grows considerably.
Anyway, back to today’s announcement. There are three new offerings Check is announcing :
- Credit & Fraud Protection
Payroll fraud is one of the most common types of fraud to occur inside a business and anyone wanting to offer payroll to their companies will want protection. That is what Check is now providing. They will assume all the risk for credit and fraud losses. - Embedded Setup
One of the key friction points is the complexity of switching payroll providers. Embedded Setup is an end-to-end tool that helps companies migrate to Check’s payroll product. - Embedded Support
Every payroll company has to offer support for their customers because, as we have said, payroll is complex. Now, there will be no need for Check’s customers to provide their own support, Check will provide their dedicated support team.
These new offerings are all about making it easier for companies to offer embedded payroll. When you are creating a new segment, as Check has done, you need to address the biggest objections.
When I caught up with Check’s founder and CEO, Andrew Brown, last week he told me that these new products arose out of customer demand. “Payroll is an overlooked part of fintech because it is so big and complicated. We are just now getting to a point where technology innovation is coming to payroll.”
Payroll is a great business because it is so sticky. Companies don’t shop around payroll services very often because it is such a pain to switch. By making it simple and seamless to set up or switch providers Check is directly helping their customers onboard their own new customers.
The most interesting aspect to me is the Credit & Fraud Prevention tool. When I asked Andrew about this, he said they have been beta-testing the product for several quarters with some select clients.
The thing about payroll is that it involves the movement of large sums of money, so it naturally attracts criminals. Check has been happy with their testing here and so now they are putting their money where their mouth is. Check is taking on the liability for any fraud so it is not something they can afford to get wrong.
Check is the first company to offer these three components in a white-label payroll system. Breaking new ground is never easy but neither is creating a new fintech category.
Andrew sees this as the way of the future. He believes “that one day there is going to be tens of millions of people paid using an embedded payroll system.”
