Visa Direct Powers Off-Cycle Payroll For ADP’s Wisely Payment Solution

No executive worth his or her salt would turn down participating in a trillion-dollar market. But what about $8 trillion?

According to the Federal Reserve, the total amount of U.S. payroll in 2019 (the most recent year available) was $8.7 trillion. And although payroll hasn’t traditionally been known as market per se, recent development in earned wage access and off-cycle payroll payments have attracted a fair amount of FinTechs, HR companies and payments companies.

The biggest is ADP, which processes one out of every six U.S. workers and over 700,000 corporate clients. In the last 12 months, it has processed roughly $2.2 trillion in payroll volume. Now for the access: ADP announced Thursday (Feb. 18) that it is collaborating with Visa to offer ADP’s clients, large and small, a digitally enabled solution for offering off-cycle payments to employees through ADP’s Wisely Now solution.

“There’s a lot of friction in the payroll environment today,” Visa Senior Vice President and Global Head of Visa Direct Bill Sheley said in a conversation with Karen Webster and Visa Direct Senior Vice President Ruben Salazar. “Most people are on a multi-week payroll type of cycle. There is great reason to believe that inserting Visa Direct in that kind of a legacy payroll approach will change lives.”

The process, Salazar and Sheley said, is simple. Visa Direct, the company’s real-time push payments platform, is being integrated with ADP to help power off-cycle payment capabilities.

Off-cycle payments in this case refer to payments that are typically made in between the normal pay cycle, like bonuses, reimbursements or pay adjustments. For Visa, the benefit is twofold: giving workers the option to receive their off-cycle pay directly to their eligible debit card and not have to deposit any money in their account, and to streamline the onboarding process for employers, to offer their workers an easy way to get their off-cycle pay digitally.

“When you see the numbers, you can only think about the massive optimization in the process by adding a piece of technology that will eliminate checks,” Salazar said. “This has a huge implication for an employer’s competitive advantage going forward, and it’s an important feature to include.

Off-Cycle Pay At Grand Scale

There are a variety of use cases that fall under the broader heading of off-cycle pay, Sheley explained. For this instance, it is things like bonuses, reimbursement and pay adjustments. Both Visa and ADP are developing more use cases going forward.

“It’s a fairly simple integration and through it, ADP is transforming a legacy operating model,” Sheley said. “And the scale that they bring and the reach that they bring in their payroll business matches up well with what we’re doing with Visa Direct here.”

Salazar and Sheley both agreed that the collaboration is likely to move the entirety of the payroll space. The combination of payroll flexibility and paper-free deposited payments, they said, will attract companies that want their payroll flexibility to recruit workers. Someday, Sheley opined, flexible payroll will become table stakes in the market when it comes to attracting those employees.

How does it work? Employees sign into what Visa calls a “secure acceptance layer” where they can sign up for off-cycle pay by entering in their debit card data, and then they can receive payments instantly. Sheley said the system is more portable than anything else on the market and does not require consumers to sign up for a special account that can only be used with that single employer. Employees are portable and change jobs, and this system is reliant on regular debit cards they have already. No special vehicle is required to gain access to the feature.

The Road Ahead

What is being rolled out Thursday doesn’t replace the Wisely Pay as offered by ADP, which is a payment card product. Instead, the offering expands Wisely Now by giving ADP clients the ability to offer their employees more efficient off-cycle pay by getting their funds for things like bonuses and reimbursements sent directly to their debit card in real time.

That growing demand, they said, is a clear signal payroll is ready for a change.

“The need to make payments immediately will become the operating model for all of payroll,” Salazar said. “Processing checks and waiting for a wire transfer — these are things of the past in many ways. So, we believe that ADP is a mover and shaker in the industry, and many will follow the same approach.”

Payroll flexibility is particularly valuable to employees who live paycheck to paycheck. PYMNTS COVID-19 Tracker project showed that by late August, a large portion of consumers reported living paycheck to paycheck. The survey showed that 59.2 percent of consumers lived paycheck to paycheck with 22.9 percent of these respondents saying they also struggled to pay their monthly bills. Another 36.3 percent said they lived paycheck to paycheck but had enough to pay their bills each month.