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Payroll-As-A-Service With Andrew Brown Of Check

Organizations of all kinds continue to explore vertical integration of payments, lending, and other financial services to create alternative revenue sources and drive growth. On this episode, we take a look at the power of payroll integrations to unlock new capabilities and opportunities for fintechs, employers, SaaS businesses, and beyond.

Our guest is Andrew Brown, the founder and CEO of Check, which is a payroll infrastructure startup that lets you embed payroll directly in your vertical SaaS, HR, or time-tracking platform. Check is leading the charge with payroll-as-a-service!

Payments & Fintech Insights In This Episode

  • Why adding payroll as a service is so powerful for organizations.
  • The story behind Check and how they help companies integrate payroll solutions.
  • How Check has had success getting users to adopt newer tools.
  • Why vertical SaaS and embedded fintech solutions continue to gain momentum.
  • Andrew’s insights on the future of payroll, payments, fintech, and beyond.
  • With so much more!

Featured on the Show

Episode Transcript

Scott: Hey, how’s it going, everyone? Scott here with you, and welcome to another great episode of “PayPod: The Payments and Fintech Podcast.” I am so excited for today’s show because we’re gonna be talking about payroll. But looking at it through a unique lens, payroll as a service. Joining me to help explore this is Andrew Brown, who is the founder & CEO of Check, which is a payroll infrastructure startup that lets you embed payroll directly into your vertical SaaS, HR, or time tracking platform. There’s a lot to cover. And I’m super interested to learn more about all of this. So, let’s jump right in. Andrew, welcome to the show.

Andrew: Hi, Scott. Thanks for having me on. Excited to do it again.

Scott: Thank you for being here. As I said, today, we want to talk about this concept of payroll as a service. But before diving into all of that, I always like to start with a really big question sort of set the stage, why payroll? We’ve talked about vertically integrating payments, in general, on this show, we’ve talked about lending services, and so on, there’s a lot of vertical integration that can happen in the FinTech world. Why explore that with payroll?

Andrew: Yes. I’m gonna leave aside payroll for just a second. I want to start with the small business owner because that’s really what payroll is ultimately in service of. If you think about that business owner and the way they actually go about their day-to-day lives now compared to 10 years ago, it’s changed quite a bit. Ten years back, most small businesses in this country were offline operations, they were running on pen and paper. Today, that’s no longer true. Now, in many cases, they actually are running on some type of modern software operating system that’s been built out over typically the last 5 to 10 years. And so you then intersect that with payroll, what you end up with is a day-to-day set of business operations where you’re managing your workforce, hiring them, scheduling them, accepting payments from your consumers, all these things are happening in one system.

While payroll has been left really kind of in the past, it’s still dominated by the same legacy players from 10, 20, 30-plus years ago, you now as the business owner have these two completely distinct separate systems that you have to manage the same data and move things back and forth. And it’s just a bit of a nightmare. Instead of focusing on running your business, you have to focus on actually how to manage all this data around. And so the reason we got into payroll was we said, “Hey, there’s a better solution to this problem, we should be able to actually, by building tools, enable these platforms to provide payroll services directly to those small business owners making their lives a lot easier.

Scott: Right. So, there’s clearly a lot of opportunity here. And I like how you’re talking about, you know, you had all these legacy systems and really uniting it and bring it all together, Check helps organizations do just that. What’s the story behind Check and really, how do you help companies integrate these payroll solutions?

Andrew: Yeah. So, you know, I talked about this perspective of the small business, let’s talk about it from the perspective of one of our platform customers. So, I’ll take Homebase as an example. Homebase is a scheduling and time tracking tool for Main Street small businesses, like restaurants, small retail stores, ice cream shops, that sort of thing. And they handle scheduling. So, instead of having literally a piece of paper on the wall that says, you know, Scott’s working on Monday and Andrew is working on Tuesday, now you manage that in the Homebase system, and can trade shifts and set up limits, and all the things that you need to do in order to actually manage your workforce. But the way payroll used to work before Check is that you had to just export all of that data out of Homebase and send it over a wall to some other payroll system.

What Check is enabled is for Homebase to actually launch Homebase payroll, and to provide first-party payroll offerings so that their customers don’t have to ever log out of Homebase, don’t have to leave and go to some other system. In just a few clicks, they can complete the whole payroll process from directly within Homebase. So, our direct customers, those platforms, we enable them to build new, frankly, business units on top of Check with new revenue streams and create even deeper stickier relationships with their customers. And then hopefully just provide better, simpler time-saving experiences for those small business owners.

Scott: That’s fantastic. And it really, for me, is bringing to mind something that we’ve talked a lot about on this show, which is this idea of ecosystems and how whatever your business might be, you don’t necessarily want people using your platform having to jump out and have a different experience or go off-site or into a different app or whatever it might be. So, what you’re talking about, Andrew, is really bringing all of that together. And then the beauty of the fact is that you can add other services on there and additional revenue streams, right?

Andrew: That’s exactly right. You know, one of the biggest things I think I’ve come to appreciate over the last three years running this business is just how big the American economy is, and how different all the businesses that comprise it are. I think it’s hard from the outside to appreciate how different your life is as an attorney versus as a plumber versus someone, you know, running a restaurant, versus a retail store, versus reading a FedEx business, you know, they really span the entire gamut. And what we’ve seen is because software is so much easier to build now versus 10 years ago, there’s specific software that’s been built for all of those industries that I just mentioned. And what we’re trying to do is try to solve the payroll pain points specifically for each of those software vendors.

Scott: Right. And I think connected to this, and it’s something that so many exciting FinTech solutions have to navigate, which is this signup and onboarding process. So, can you walk us through briefly what that looks like for someone who’s looking to use Check?

Andrew: Yeah. So, there’s really two phases to this. There’s how do you work with Check, and then there’s how do you onboard two businesses onto the payroll product that you built on top of Check? So, working with us is a more straightforward process. We work very closely with our partners to help them build out their products and take you along, what we call, our path to payroll. It’s a whole journey of how you get up and running building your payroll product. And so our teams will work closely with you to help build that out and, you know, over a period of weeks or months.

What you’ve ultimately built then is a whole payroll product, including onboarding flows for both companies and employees. And so that’s something where Check has components that we offer that our customers can just embed directly in their applications and they collect all of the bank account authorizations, the bank details, all of the tax information at the federal, state, and local level, all that metadata that’s needed in order for you to be able to process payroll. And we can provide that to you, that UI to you without you having to go do it yourself.

Scott: So, pretty painless overall, right?

Andrew: Certainly on the business side, yeah. I won’t undersell building a payroll product is not trivial.

Scott: Yeah.

Andrew: You know, in terms of working with us, it was basically impossible to do before Check came along. There were a couple of examples of startups adding on payroll as an extension, but they were very few and far between. Typically, they were multi-hundred-million-dollar acquisitions was the most common way to get into it. And so what we’ve done is we’ve made that probably 25 to 50 times easier, you know, or we spend every day trying to figure out is okay, how do we go from making it 25 times easier to 100 times easier to still build out those products?

Scott: It’s a process. It’s a marathon, not a sprint, right?

Andrew: Exactly.

Scott: So, to really put a fine point on all of this, we were talking about unlocking new revenue streams and things like that. How can payroll be used to really unlock these new capabilities for lenders, FinTech companies, and employers?

Andrew: Yeah. So, you know, it’s pretty straightforward. Imagine you’re a vertical SaaS company, you know, another one of our customers, ServiceTitan, is a good example of this, and you want to offer payroll as a service to your customers. Payroll is something that every single business needs, and it’s something that they are used to paying for. So, it’s relatively straightforward for you to be able to offer that as just an additional SKU on your platform that you are going to ask those small businesses to sign up for. So, the revenue stream is pretty obvious there. I think the under appreciated piece is actually the impact that it has on retention. Payroll is an incredibly sticky offering and a sticky product, it’s something that’s difficult to switch. And so as a result, you can actually see incredible economic benefits from the platform’s perspective by attaching your customers to payroll, and therefore deepening your relationship with them and keeping them around longer.

Scott: I love it. You mentioned taxes briefly. And maybe it’s on my mind because at the time of this recording, you know, we’re wrapping up the year, we’re moving into a new one. They can be a bear for basically anybody doing payroll, and certainly, for small businesses and things like that, how does Check really address this and help with, kind of, the tax approach to things?

Andrew: It’s a great question because, at the end of the day, payroll is really a tax business. It has pay in the name, you know, payroll. And so I think people sometimes think of it as a payments business, which, don’t get me wrong, it is, we sit in the flow of funds and move a lot of money. But taxes are actually the hard part of payroll. And so that is really what Check focuses on. And the way we make that simpler for our customers, and ultimately the small businesses who are using our products, is by really abstracting away all of that complexity behind our APIs. So, when you think about the U.S., we’re not just one government system, it’s the Federalist system across 50 states and many thousands of different localities, cities, states, you know, in some cases, taxes all the way down to the school district level.

What we’ve done is we’ve spent three years building engineering teams and compliance teams that understand all of those rules and regulations and built software to incorporate them into our systems. And all you have to do is a customer is pass us a relatively small set of information, an address about where the work is being done, where the person lives, and we’re able to handle all of that tax calculation, as well as the creation of all the tax forms and filing those from the various governments on your behalf. So, that’s really core to the service that we provide.

Scott: And it’s absolutely huge. And I like how you sort of pointed out how complex that just the system we live in and businesses operate in can be. And taking some of that complexity out of the equation through technology and solutions is just, oh, man, that’s great.

Andrew: It’s really…

Scott: Yeah.

Andrew: Yeah. The way I think about it, Scott, is, you know, rewind 100 or 150 years, you know, and you’re starting up a restaurant, you hire someone, you hand some cash to them, that’s kind of the end of the story, right? That’s all that’s needed. That’s just not the way the world works anymore. And as we’ve seen over the last 18 months with COVID, our safety nets, the government programs, all these other things are critical to keep the modern world functioning. And the way those are primarily funded is actually in large part via payroll taxes. And so, you know, there’s a reason the industry exists, but it’s incredibly complicated, and maybe just way too difficult for any business owner to navigate on their own. And so the whole industry exists to make it simpler. And our goal is very much to work with our partners so that the small business owner really has that same experience that they could have had 100-plus years back before all the complexity came in.

Scott: A hundred percent, a hundred percent. I want to shift gears a bit because beyond Check, when we are talking about vertical SaaS and embedded FinTech solutions, in general, what’s so powerful about those? Why is this landscape continuing to shift this way, do you think?

Andrew: At the end of the day, it’s just a better experience for that business owner. You know, if you think back into, you know, maybe 5, 10 years back before a lot of these solutions came onto the market, as a business owner, you were going to a whole wide array of vendors in order to try and stand up your business. You were gonna have to talk to one person about how you were going to accept credit cards, you have to find another solution for how you were going to do your accounting, to find a different solution for doing your banking, and on and on and on. You’d probably end up with, you know, a dozen, two dozen, maybe more different vendors that you were working with all to handle, you know, what at the end of the day were relatively straightforward tasks, and none of which were the things that you actually got into business to provide, right? But this is just like the basic infrastructure that’s needed to set up your operation.

And so what these vertical SaaS companies and embedded FinTech companies have enabled is for that small business owner to have to think about any of that to be able to get it all in one place quickly, easily, and simply. The end result, in my mind, what it really does is it actually levels the playing field so that if you’re a small business owner, you know, starting a restaurant now, with the tools you have available today, you’re able to compete much more effectively with the larger chain players and the big enterprises out there that have great internal software and tools because folks have now built it for you and you can get access, you know, via these vertical SaaS platforms.

Scott: You know, one thing that’s bringing up for me is just this idea that, as a small business owner, as an entrepreneur, your most valuable asset is your time. And one of the things that can be challenging when you’re competing as a small business owner is some of those larger businesses, they just have more time because they have more people, they have more resources available to them. So, when you talk about, Andrew, these kinds of solutions that continue to get pushed forward, that’s allowing…that’s freeing up time, and allowing small business owners to focus on things that they can do best and help them succeed, right?

Andrew: A hundred percent.

Scott: Okay. Shifting gears a little bit, but I think this actually is a nice segue, and that’s integrations because they are such a huge sticking point for many businesses. It’s something that Fintechs, payments organizations have to keep in mind when developing their tools. It’s something, you know, I’ll field sales calls with merchants and there’s always a question that will come up about, you know, well, do you integrate with this? Not working with a company’s preferred software can be an instant deal-breaker. What’s Check’s philosophy around integrations, particularly with payroll? And how do you put that philosophy into action, maybe add new integrations, and so on?

Andrew: So, it’s really core to our philosophy that Check is, at the end of the day, an API-first payroll provider. And so by virtue of being an open API-oriented platform, we don’t have to maintain a huge suite of integrations. And if we don’t work or kind of have an out-of-the-box solution for some given product or service, that doesn’t stop any one of our customers from still using us and still integrating us in with that other product. It’s really getting foundational to the power of the infrastructure model that we’ve adopted. And it’s something that we’ve seen really play out over the past couple of years as we’ve gotten to work with more and more partners who have a whole wide array of needs. It turns out that, I was saying earlier, you know, each business is different. And they each need different types of accounting tools, and different types of health insurance benefits, and different types of financial retirement planning benefits. And trying to go do each of those ourselves would be really just intractable. And so instead, by being open, we enable a whole ecosystem of our customers and then partners around us to make sure that Check works well with all those other services.

Scott: Shifting gears again. We’re just continuing to shift gears here. But I always like to look at the growth side of things, the success side of things, many folks are out there, they’re starting new FinTechs. They’re offering revolutionary financial products that really changed the way businesses and consumers have operated around payments or finance or what have you. One challenge when you are innovating is really encouraging the adoption and achieving that growth. Andrew, what’s Check’s philosophy around getting people to adopt a newer tool? And how do you put that into action to say, “Hey, this is new, this is a little different?” How do you get them to say, “Okay, I’m gonna try it?”

Andrew: Yeah. I mentioned the term path to payroll earlier. And it’s one I want to come back to here because what it really does is that term and the whole process is something we’ve encapsulated specifically to help our customers with this challenge. What we recognized is that building a payroll product was only one part of the challenge. Supporting a payroll product was the second part of the challenge. But in addition to those two, you needed to be able to actually market and sell your payroll product as well. And none of those things were trivial.

And so what Check has done over the past couple of years is to develop expertise in each of those areas, turn those into processes, procedures, playbooks, and advice that we’re able to work with each of our partners to make sure that they are setting up their business in the right way as they go to roll out those services. And so, in some cases, we can help, you know, do those things for our partners, but in most cases what we’re really doing is really teaching them how to fish and showing, “Hey, you know, do it the slightly different way, and you’ll actually be a lot more effective.” And that just reduces the time to value for each of those partners that we’re working with.

Scott: I mean, that’s so huge. And then I guess the other question related to this, there can be this uphill battle for payments and FinTechs to truly break through the noise, increase their brand awareness and really put themselves on the map. So, they may have great solutions like you’re discussing, but, you know, there’s just a lot out there and a lot to get in front of people. So, what do you think are maybe some of the keys to improving brand awareness around industries like this? Are there any specific, I don’t know, high-level strategies that maybe any FinTech should consider exploring?

Andrew: For me, it’s really, at the end of the day, about storytelling. I think you need to have a unique offering, and you need to be able to tell the story around why it’s different and why folks should care. And I think that is really what Check has adopted and what’s benefited us so well. You know, it’s just January that we actually publicly launched the service after two years in stealth. And in less than a year, we’ve seen this go from an idea that really no one was thinking about to actually an entire industry segment and something that basically every vertical SaaS company and every workforce management company and, increasingly, a lot of FinTech companies are all planning to do when it comes to embedding payroll. And so, you know, just encourage other FinTech companies to do the same thing. And once you have that story really honed, really find as many outlets to tell it as you can.

Scott: Like this podcast?

Andrew: Exactly. A hundred percent.

Scott: I love it. All right. So, as we’re sort of winding down our discussion here, I always like to turn the attention to the future because, hey, the now is great but what’s coming next? So, what do you see in the long-term future for payroll itself in, say, maybe 5 to 10 years? So, again, really long down the road, what technologies, solutions, trends may continue to impact it?

Andrew: I think payroll is going to be something that, increasingly, both business owners and employees don’t think about. If technology goes the way that we expect it to and frankly the way that Check is pushing it forward, you will be able to just pay people seamlessly. So, when you think about how frequently you’re getting paid, how long it takes from the business owner’s perspective between when they run payroll and when you’re paid, both of those things will become more and more frequent and the timelines will reduce. Meaning about the amount of time folks have to spend thinking about taxes and how they submit them and doing things manually. That will all go away and it’ll all be handled in the software that you’re using, again, every day to run your business. So, that’s one piece of technology, it requires new payment rails, it requires new tax infrastructure that Check is building, it requires these verticals SaaS platforms we talked about to actually embed these financial services, embed payroll. But the net result of all of that is going to be folks just spending less and less time having to actually think about these things and, again, more time just running your actual businesses.

Scott: Yeah. And, you know, that goes into something that many people have discussed, and that’s this idea of the best experience is no experience at all in the sense that you aren’t even thinking about it. It’s all just happening and you don’t have to worry about it. It’s a frictionless experience.

Andrew: Exactly.

Scott: So, when you look at Check itself, what do you see in the future for Check? Any specific features, partnerships, or otherwise that are on the horizon that you can share, of course, that our listeners might find to be interesting?

Andrew: Yeah. I think one of the most exciting things that Check is working on with our partners and that we’re thrilled to work with even more folks on going forward is creating that actual instant payroll experience, you know, that I just referenced. When you think, as a business owner, why do I have to run payroll one, two, three, even four days before the pay period actually ends? And the answer to that is largely old ACH rails and risk issues. There’s no reason it necessarily has to be that way today. And so one of the things we’re really excited about is giving not just a small slice of business owners but ultimately, hopefully, every business owner the ability to actually hit a button, run payroll, have their employees paid instantly. That’s the customer experience that we’re working towards with all of our partners.

Scott: It’s gonna be really exciting to see where you guys can take it all. All right. We have a segment that we like to end with on each and every show. It’s five questions, it’s rapid-fire. Are you ready? Make a prediction about the future of payments or payroll you expect will happen in the next 12 to 24 months, so more short-term.

Andrew: The majority of vertical SaaS platforms and small business platforms, in general, will actually introduce first-party payroll services.

Scott: What’s one cool piece of payment or finance-related technology that you’ve come across recently, unrelated directly to your company, that impressed you?

Andrew: I’m really excited about the anti-fraud space, actually. I think there’s been a ton of innovation there over the last couple of years as FinTech has really exploded, I think crypto has pushed that forward too. And so, you know, you now have technology doing things like monitoring the mouse movements of, you know, folks on the page to understand if it’s a real actor or someone that may be trying to commit fraud, things like that, that actually would make it so much easier to build these financial services that we all want.

Scott: We’ve had a number of episodes on this, and I completely agree, really just fascinating technology. You love that for, hey, let’s stay ahead of the bad guys, right?

Andrew: A hundred percent. It makes my life easier.

Scott: Exactly, all of our lives really. In the next five years, most Americans will make a purchase with either Bitcoin, Apple Pay, something else entirely. Which one and why?

Andrew: I’m gonna go with something else entirely, or at least neither. To me, Apple Pay, you know, iPhones I think are 55% of the U.S. market and actually declining. So if they got 100% penetration to get most Americans would be tough. And Bitcoin has proven to be a pretty great store of value much less than a good medium of exchange. So, I see the innovation in payments and consumer payments as being too much more incremental. And the parts I’m most excited about are actually still on the e-commerce side things like, you know, Shop Pay from Shopify and those types of services that I think that’s where you’re going to see, you know, more and more consumers moving to, and that’s where your most of the volume is gonna go.

Scott: Andrew, what’s one piece of advice you would have for someone who’s considering the payments or FinTech industry as a career?

Andrew: I think you really just go deep, you know, these are huge spaces and by going deep, you can become experts in individual pieces of them. And you’d be surprised actually how few people can actually understand it once you go beyond just that first or second layer. And so even very early on in your career, you can have a lot of success if you take that approach.

Scott: Last question here. What’s the best business advice you’ve ever received and from whom?

Andrew: Yeah. I think I have to go way back to my dad. And this is probably when I was in middle school or something. And, you know, what he told me was, you know, you walk into an office and you’re meeting with someone in a business setting, treat the secretary, the person greeting you, the same way that you would treat the CEO. I think that’s something, at the end of the day, business is all about people, and treating people the same way has a way to come back around and benefit you. And I think too many people, you know, forget that, especially as they go on in their careers.

Scott: I think that’s fantastic advice and something I’ve tried to live by. And I think that’s really great insights for anyone in business to consider. Andrew, thank you so much for joining me on the show today, sharing Check’s story, and really the innovative things that you guys are doing. It’s going to be so exciting to see where it all goes. And if folks want to find out more, maybe see how you can help them integrate their payroll and all of this, where can they do that? Where should they go?

Andrew: Yeah, check us out on our website, checkhq.com, or just shoot me an email. I’m Andrew@checkhq.com.

Scott: Perfect. Thanks again, Andrew.

Andrew: Awesome. Thanks, Scott. Appreciate you having me on.

Industry Spotlight

Check

Check is a payroll-as-a-service API that lets you embed payroll directly in your vertical SaaS, HR, or time-tracking platform.