This afternoon has been abuzz with all sorts of news from companies such as BitPay working to integrate the bitcoin payroll features with other companies but Bitwage is getting in on the announcements this afternoon announcing a new private beta that will allow anyone to receive wages via bitcoin.
Bitwage allows anyone, regardless of how big or small, Bitcoin-friendly or Bitcoin-hostile their employer is, to be able to receive a Bitcoin wage. If your employer offers direct deposits, there is no need to evangelize the employer about Bitcoin.
In addition, the Bitwage solution will allow for employees and employers alike to create their capital gains reports and file them through a partnership with Gocheto Financials with just a few clicks.
The solution that Bitwage is touting has some interesting implications. The first being that you don’t need your employer to pay you in bitcoin anymore as they simply direct deposit your check as they normally would and Bitwage takes care of the rest. The second interesting implication is that even if you are unbanked or underbanked you now have access to receiving your wages.
There are over 10 million unbanked residents in the US alone who either cannot keep a minimum balance to set up a bank account.
Without bank accounts, this segment of the population are forced to deal with the fees and friction associated with the check cashing and prepaid cards industry. In 2012, Green Dot, a major prepaid card player, reported that there were more than 4.2 million active cards and $16.1 billion in gross dollar volume of funds loaded onto their cards that year. Netspend reported 2.1 million active cards with $11 billion in gross dollar volume.
The costs associated with prepaid card include initiation fees, monthly fees, POS fees, cash withdrawal fees, balance inquiry fees, transaction statement fees, customer service fees, bill payment fees, fees to add or load funds, dormancy fees, fees to get remaining funds when closing the account and overdraft fees. On average, the fees on prepaid cards cost the unbanked and underbanked up to $30 a month depending on the card. In addition, there were over $31 billion in overdraft fees last year in the US alone. These costs are just for the ability to hold and send money.
With BP(i), unbanked and underbanked now have a new opportunity to have access to these basic financial tools without all of the exorbitant costs related to the traditional financial system.
The third implication of this new system is the ability to pay international contractors.
Over 2.6 million full-time jobs are outsourced from the United States alone. Millions of freelancers contract for companies in US and Europe from other countries, many of them without a reliable banking network or wire-transfer capabilities. Even after international contractors are paid, after all the delays, transfer fees and conversion fees (which total to about 8% on average), their local currency can be quite volatile and not a good store of value, such as the Ukraine Hryvnia, which lost over half its value against USD during 2014.
What do citizens of countries with high (and under-reported) inflation rates such as Ukraine, Argentina and Venezula do to store the value of their wages? They exchange their local currency for dollars as soon and as often as possible. They often have to deal with currency controls and/or a real shortage of paper dollars in their region, and thus resort to doing business with back-street money changers, who charge a premium for their services.
With the creation of BP(i), receiving international contractor payments is as easy as receiving Bitcoins. Use Bitwage to accept the payments in the US, thereby reducing costs for both you and your employer, and have Bitcoins sent straight to your wallet.
Bitwage has stated that by the end of the year, they will be offering fully transparent international payments between the US and the Philippines. This service will be expanded to other countries in early 2015.
Those interested in signing up for the private beta may do so at: http://bitwage.co