Pinwheel is Revolutionising Payroll Systems

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Pinwheel is the first ever API built for payroll systems.

Pinwheel was started by Kurt Lin, Anish Basu, and Curtis Lee, ambitious innovators who have a history of startup breakthroughs in valet service development and mobile gaming.

Off of the heels of success from the valet app, Luxe, co-founder Curtis Lee was ready to innovate, this time within the ever expanding fintech space.

Payroll systems take direct deposits of income and allow users to split and send their check however they choose. Payroll systems are used by employers, in compliance with the W-4 standard tax form for recognition of employees, to distribute payment to workers and the income withheld by taxes.

These systems are important for a variety of reasons:

  • Payment accountability to employees, which would indicate financial stability for the company.
  • Increased value through managed bonuses and benefits can be implemented through payroll systems.
  • Establishing adequate salary and tax benefit legitimizes a company’s reputation.
  • Payroll systems obligate a company to report tax filings and provide benefits and deductions for programs such as Social Security to the government.

Payroll services provide such robust infrastructure for employers, but from the perspective of employees, withdrawing funds from a payroll system is a safer alternative to predatory financial products such as debit cards.

Payroll services occupied a share of 14.76% of the Human Capital Management Applications market in 2018.

The immobility of payroll systems in combination with other financial service delivery systems may have stilted returns for its market. It is projected that the Payroll Systems market will have a 1.2% CAGR; this is well below the Human Capital Management CAGR of 2.6% and would dwindle its market share to 13.8%.

This slump in Platform Systems growth is in relation to their pitfalls.

 

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These platforms are not fully realized, as they are not connected to banks, lending services, and financial institutions that can assess and use the financial data.

Pinwheel remedies this solution by bridging the gap between payroll accounts and bank access, giving users access to cheaper and more manageable financial products that don’t perpetuate the cycle of debt.

Pinwheel acts by providing an API (Application Programming Interface) and SDKs (Software Development Kits) that allow for a user to connect an existing payroll system with the financial institution app of their choice.

With a pipeline between payroll accounts and financial applications, the possibilities of Pinwheel are endless. However, there are three immediate cases where Pinwheel becomes most useful:

  1. Users can access Paycheck Linked Loan technology to allow for lenders to collect payment straight from the borrower’s paycheck. This allows for borrowers with poor credit to access fair interest rates.
  2. Users will be able to switch the source of direct deposits between banking institutions with only a few clicks rather than the bureaucracy of filing paperwork for change of funds amongst institutions. This development also increases the assets under management of banks by coming customers; this is an important source of revenue generation.
  3. Pinwheel offers a seamless solution to the issuance of substantiation of tax documents and pay stubs which guarantees fraud prevention and data security for users.

Pinwheel can be accessed by developers using a few lines of code, which will integrate the platform with the financial services app of their choice.

Pinwheel will automatically carry direct deposit data and account information with encrypted protection.

Pinwheel has already been met with initial success with around $7 million in seed-funding from venture capital groups including First Round Capital and Wonder Ventures.

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Investors, like Josh Kopelman of First Round Capital, have remarked on the efficacy of Pinwheel stating:

“You take what would happen in four weeks and [Pinwheel] turns it into four minutes,”.

Pinwheel has tremendous potential for widespread use among consumers, as evidenced by its business model and venture capital investor optimism.

 

Noah Hill

Equity Research Analyst

Noah Hill is a rising senior at Boston University, majoring in economics and minoring in computer science. Noah is passionate about data science, statistical analysis, and financial markets. As an active participant in the VentureCafe Initiative, Noah has associated himself with emerging leaders in the FinTech community, understanding both the passion and technology that drives the future of investment management/analysis. As a quantitative analyst in his Finance Club, he has collaborated to provide comprehensive investment strategies for a $650k student-run fund. With this background, Noah places an emphasis on statistical modelling and the impact of sentiment when deciding on an action to take with an equity. In his spare time, you can find Noah singing opera or reading up on political philosophy.

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