The Broken Connection Between Payroll Data and Financial Access
Cash, as in physical, paper currency, used to be everyone’s form of income. Before 1861, state banks printed their own colorful paper notes, and merchants sent couriers across town to collect promised funds. But, this process was rife with problems and continuously broke down. Fraud, errors, delays, value fluctuations, and lost or stolen notes plagued merchants, banks, and consumers alike, and there was little that could be done about it. Eventually, the federal government stepped in to support these fragmented notes with a national currency that retained the same value for everyone (solving a piece of the paper currency problem).
Today’s income is hitting the same bottlenecks across lending, leasing, renting, mortgage, bill pay, wage advance, and employment screening. Simply put: we are pretending paper is something that it’s not—a network.
But for those of us interested in spending our cash nearly anywhere around the globe, we are in luck; financial companies have removed any remaining friction from the process. Simply hand your Visa over to Bob at Chevron, and your money streams to get that sweet $4.99 gallon of unleaded. That card in our pocket gives all of us global access to funds because Visa connects two sides of a transaction to form a network: merchants and banks.
While simplifying it for you and me with the swipe of plastic or the tap of a phone, this system is actually very complex. Chevron is one of millions of merchants; Visa is one of just a handful of networks; you are providing authorization, and your property (cash) is under the custodianship of one of 18,000 US banks. Merchants and custodians are too fragmented to work directly with each other, and so the network (Visa in this example) is picking up the slack. Perhaps that’s why Visa is up 1,300% over the last 10 years, and the KBW Bank Index has produced 30% returns over the same period.
But your paycheck is a different proposition. Bob at Chevron is not swiping your crinkled paystub. With good reason—that document is analog, unverified, and untraceable. Instead of a network to connect these same merchants to 250,000 payroll processors, we leave consumers with a broken process of downloading, storing, printing, copying, sending, and uploading PDFs. It’s not that this process is broken—it’s that income, unlike cash, has no network to transmit itself on.
Visa was a slog to build, however. The first set of cards were distributed in 1958 to every resident of Fresno, California, with no repayment mechanism in place other than goodwill. The network was sustained because the business proposition was so strong. Similarly, payroll can seem burdensome to deal with, but market downturns present a fresh opportunity to innovate. It has never been more true that workers can’t live at the speed of bi-monthly pay; that merchants are looking to cut costs on manual verification methods; and that payroll processors want to upgrade their security away from fraud-ridden paper exports of the data they are the custodians of.
Argyle’s network of payroll processors does to paystubs what Visa did to cash – it provides a network to transact. Relaying data from hundreds of thousands of fragmented payroll providers directly to financial institutions, Argyle is empowering income information for the next level of financial access. Using over 140 granular data points (like hours worked, title, years at a company, and more), financial institutions can accurately understand past income and future income, opening access to earned wages, paycheck-linked lending, and real-time information like never before.
This new era of insight is no less revolutionary than the creation of national currency or the first global networks fostered by companies like Visa—and with it will come greater access to financial services and innovation that bring our financial institutions in line with the way people live, work, and get paid.