NIGEL DOLLENTAS | FEB 27, 2015 | 08:00
BitWage is a company that allows you to receive a percentage of your paycheck in bitcoin. The company also provides assistance with legal papers. Additionally, it is not necessary to have a bank account to use Bitwage’s services.
Amagi Metals and ChangeTip both use BitWage to pay their employees in Bitcoin, making it a well-known company in the Bitcoin space. I was able to talk to Jonathan Chester, the founder and Chief Operations Officer of BitWage, and ask him a few questions. Below is a YouTube video by Jonathan showing you how to sign up for BitWage.
For those who may not know, what service(s) does BitWage offer?
We make Bitcoin wages and international payments easy. We offer two different types of solutions to make this possible, an individual and employer solution.
Our individual solution enables anyone to receive their wages next day through us without their employer signing up. This means that employees and contractors in the US and around the world can receive their wages in Bitcoin without requiring their employers and clients to have to learn an entirely new software (let alone digital currencies).
In the US, most of our individual customers receive a part or all of their wages in Bitcoin in order to engage in a seamless dollar cost averaging investment in Bitcoin or to remove their reliance on the banking sector. Since our solution does not require the employee to have a bank account, many use our solution as an alternative to the slow, expensive and inefficient traditional financial systems.
Outside of the US, many contractors use our service to receive their international payments easier. Unlike domestic payments, international payments are slow and expensive, often costing up to 7 business days and 8% in mixed costs between fees and exchange rates.
By using our system, international contractors reduce these costs in time and money significantly and they then decide whether to keep their payments in bitcoin or convert them into their local currency. Although we currently only have fiat currency outputs in the Philippines, we help our international contractor customers with consulting on how to convert into their local currency when they ask.
Employers typically use our service to have an easy solution to pay their international employees and contractors or to have an easy way to manage Bitcoin payrolls.
We have an employer who would previously pay his Brazilian employees through his bank, which he said would cost him 8% and “days” for the transaction to complete, even though the bank claimed to have “free” international wire transfers. When he switched over to our service, his company would actually gain money, regardless of whether the price of bitcoin was rising or falling, and his employees could receive their local currencies within 24 hours. Although not every company sending international payments gains money through our service, all of these types of companies experience significant savings in time and money.
Many employers are using our service to make it easier to use their own stock of Bitcoins to pay their employees, such as Changetip and Amagi Metals. Previously, these companies faced two major risks when managing each employee’s individual address, the risk of sending money to the wrong address and the risk of exposing an employee’s public address (and thus their financial information). We provide a secure system for employees to manage their own public addresses on the fly, creating a degree of privacy between the employees and their employer, while allowing employers to only have to worry about paying out to a single Bitwage distribution address with a QR code.
The only limitations to our system with fiat currencies is that we can only accept fiat currencies from US companies at the moment. However, we are looking to expand both our input and output currencies as we work though our public beta.
If someone were to start accepting some or all of their paycheck in BTC, will they have to deal with extra legal papers?
There are two different aspects to this question, the first is whether receiving BTC requires employees and contractors to have to do with extra legal papers and the second is whether receiving BTC as part of your wage increases the legal work involved. As you may or may not know, in the United States, BTC are treated as assets, thus subjecting them to capital gains tax. This means that BTC capital gains should be reported on your schedule D’s when performing your tax filings. We have an excellent partner, Gocheto Financials, that specialize in Bitcoin accounting and payrolls for anyone who needs help with these filings.
When receiving wages in Bitcoin, there is no difference between regular income, payroll and capital gains taxes that would apply in comparison to receiving BTC outside of wages. Employers should just remember that when performing BTC payrolls with their own stock of BTC, they need to perform payroll tax calculations and set aside the correct amount of fiat currency to pay off the payroll taxes to the government.
Can you tell me about your choice of opening the service to the Philippines?
The short answer, everything just seemed to fall in place.
The Philippines happens to be one of the top countries receiving outsourced jobs, amongst the like of China, India and Bulgaria. When looking at these countries, we examined the various environments surrounding the expansion, including taxes, regulation, distribution and the quality of exchanges in each country. Although China and India topped the list on outsourcing payments, the distribution methods, tax laws and unfavorable regulatory regimes for digital currencies required more time and capital for expansion. The Philippines happened to have all the favorable aspects for expansion in place, including a strong Bitcoin ecosystem with quality exchanges, required for us to start our first international expansion.
Will BitWage be expanded into other countries as well?
The world is increasingly globalizing. Companies such as Accenture, now a 27 billion USD management consulting and outsourcing giant, have been helping fortune 500 companies work with employees around the world for years. Online contractor marketplaces, such as oDesk and Elance, have been making it easer for contractors and businesses around the world to connect with the click of a button. While finding jobs and partnerships on a global scale has never been easier, we here at Bitwage still see that there is a challenge in international payments.
We plan to continue to build out currency inputs and outputs with our system to enable a seamless experience between employers, employees and contractors around the world. Our goal is to enable anyone around the world to engage in the global workforce, opening doors to potential employees and contractors without bank accounts to be able to receiving their wages efficiently while providing employers a one-stop shop system to easily pay all of their employees and contractors.
What can we expect in the future from BitWage?
We have some very exciting products and partnerships just over the horizon. We can not go into too much detail for now, yet we plan to be bringing the efficiencies of the blockchain into a far more mainstream market in the near future. Keep your eyes peeled.
BitWage is a company that employees and employers should consider alike if they are interested in using Bitcoin for their wages. BitWage is expanding and if it is not offered in your country yet, I don’t think that will be the case for long.
Full article available here.