Ultimately there may be cost savings opportunities for corporate treasury operations — Challenger pointed to an emerging opportunity for multinational firms to lower payroll costs globally, and Johnson said transferring cryptocurrencies should be exponentially cheaper than the existing system of banks and middlemen like ADP.
Payroll processing is big business: ADP generates a fee per paycheck for its processing, with 20 percent of its business international, according to Colin Plunkett, Morningstar analyst. The part of ADP that includes payroll can contribute as much as 75 percent of ADP’s revenue and operating income — workers’ comp and 401(k) services, which reside in the same business line, also contribute, Plunkett said. In the most recent quarter, $2.3 billion of a total $3 billion in revenue, or roughly 66 percent, came from ADP’s employer services division.
There are payroll companies that have started up in recent years to specifically offer employers a way to pay workers in digital currency. But right now it’s more about employees asking for the option than corporate treasurers trying to save money, McGrath said.
Challenger noted that the U.S. dollar has a pretty incredible history of holding value over time. The vast majority, even millennials, still prefer USD to Bitcoin, he said. Total physical cash in circulation grew by 7.4 percent in 2017 to $1.57 trillion, according to the Federal Reserve, and cash in circulation was at $233 billion last year, also up from the previous year.
“It’s not an enormously attractive employee benefit right now, even in the tech sector, but it’s something companies should at least have on their radar,” Challenger said. “Since we’re starting to see it as part of compensation already, it doesn’t seem so far-fetched.”
“People ask, ‘What will it take for crypto to become more mainstream?’ One common answer I give is, ‘People getting paid in it,'” Johnson said.
Johnson said he does not currently use his own crypto holdings to buy things, just like he doesn’t cash in a tech stock he owns to buy pizza. “I spend dollars. I think when more people are paid in crypto, they may save some, but they will still need to live day-to-day life, and that’s when use becomes more widespread. I also think the price fluctuations will be not as great. When it’s not driven by emotions — greed and fear — when it becomes more of a currency we transact in.”