New Member Q&A – Atomic
What is your company’s role in the payments industry (program manager, issuer, processor, service provider, etc.)?
Lindsay Davis, Head of Markets, Atomic:
Atomic is a digital services provider. Our payroll integrations are the payments infrastructure to securely connect end consumers to financial data and automate setting up and updating direct deposits.
Atomic is the market leading provider of payroll APIs, trusted by 10 of the largest fintech firms, including digital-first neobanks, alternative lenders, and digital brokerages. We are also the destination for direct deposit acquisition and enable features such as early paycheck and fractional payments, for banks, credit unions, and financial services partners.
What kinds of payments do you support?
Direct deposits account for our largest volume of payments and we also support ACH credits. A few use cases we support include payments by state unemployment systems and non-standard direct deposits from payroll providers such as fractional disbursements and non-recurring payments.
For market sizing context, in 2020, direct deposit accounted for 12% of ACH volume, representing 8 billion payments for salaries, wages, benefits, and assistance from employers to individuals, according to NACHA.
Atomic is also working with partners to digitize physical payments and reduce payroll fraud. While 94% of workers receive their pay electronically by direct deposit, checks capture off-cycle payments, such as real-time payouts and wages for non-W2 workers. The Federal Reserve collected 940 million paper checks worth $2.14 trillion in Q3’20.
What kinds of special features do your products and services offer?
Atomic simplifies complicated payroll integrations with a single API that covers over 165 unique payroll connections. Including incumbent payroll providers, bespoke enterprise solutions, modern HR tech providers, gig-economy platforms and government systems, Atomic’s payroll APIs cover approximately 65% of the U.S. workforce with a combined reach of 95 million workers. Combining those elements gives us a stronger conversion benchmark to traditional players.
Put simply, Atomic’s payroll APIs connect consumers to their paycheck and financial data trapped in payroll systems.
This solves two problems for our customers and their end users. The first is accelerating payday for consumers through a streamlined portal to set up or change direct deposits. For neobanks and brick-and-mortar banks we work with, this improves direct deposit acquisition and creates a better user experience.
The second problem we solve is qualifying users for financial services – for instance, loans or credit – that are contingent on income and employment data (VOI & VOE). The data behind the paycheck, such as gross earnings, earnings net of taxes, employment type and status, among other insights, are all accessible to consumers digitally.
As the surface area for digital payments expands, so do the threats for fraud. Further, fraudsters are only getting more sophisticated. By reducing the circulation of paper checks and use of pictures and screen shots, we have been able to prevent payroll fraud for customers and blacklist scammers across Atomic’s customers. We have also obtained our SOC II certification and are in compliance with consumer data protection regulations including CCPA and GDPR to ensure consumers know their data is secure and they are always in control of who has permissioned access to their financial records.
What kinds of companies are you looking to partner with?
We are looking for partners that share our vision to build more on-ramps to financial services for consumers and ways to collaborate to achieve our shared goal of democratizing payments while mitigating fraud.
Payroll APIs is a nascent category we are actively bringing to market with our customers, partners, and peers in the industry. We have had positive momentum however, only made a dent in our mission. We welcome opportunities to increase industry acceptance, adoption, and bring new applications for payroll APIs to market with members of the IPA, regulators, payroll providers, fintech firms, and financial intuitions.
What do you think the future of payments holds in the next five years?
The future is bankless accounts enabled by APIs, akin to Henry Ford’s horseless carriage, and it’s here now. In 2020 branches were rendered irrelevant and despite adapting to the “innovate or die” philosophy of fintech, banks are debating the past and fast following fintech playbooks. It might take longer than five years, however, in time we’ll evolve entirely from the branch-based model to mobile-first, as it’s already happening now, something we shared further insights on in our Atomic Intelligence newsletter here.
Keeping up with financial regulations can be a tough job for anyone.
The Innovative Payments Association is here to help our members – and the payments industry at large – keep track of laws and rules that could affect their businesses. We also give a voice to the industry, so they can talk to regulators and legislators to help foster an environment where companies can continue to innovate and grow as they help individuals and businesses meet their financial goals.
In this episode, Brian Tate, the IPA’s chief executive officer, and Grant Hannah, the director of government relations, talk about potential legislation and regulation at both the state and federal level, and we discuss lawsuits that will affect the industry.
Members wanting to learn more, should plan to join our weekly and monthly government relations calls. We also welcome direct questions from our members. Nonmembers can visit www.ipa.org to learn how to join.
As the fintech industry continue to innovate, one of the big questions is where does it go from here?
The future direction of the industry may be best represented by a company that has gone through its evolution. Green Dot is one of the original Fintechs. It started with prepaid cards sold mostly through retail and has since evolved into a leader in the digital bank space. Its change from a prepaid card program managers to digital banking companycould foreshadow the future.
In this episode, we talk with Greg Quarles, president of Green Dot Bank about how the company has evolved to work with tech partners like Apple, Google, and Uber. We also discuss the advantages of having a bank charter, and why other fintechs will need to consider adding products like lending if they want to thrive in the long run.
Over the last 18 months, the dramatic changes in the ways that people live, work, and pay have meant that fraud prevention rules that were once very effective have lost some of their power.
In the latest episode of the IPA Payments Pod, we talk with Brian Grech, vice president of sales and marketing for Deep Labs, which uses persona-based artificial intelligence to predict behavior and prevent fraud. We cover how the pandemic created new risks that were not covered by old models, so what once looked like fraud could be a legitimate transaction, and what once looked legitimate could be fraud.
We also talk about what artificial intelligence is and how it can help companies adapt to rapidly changing environments. As we come out of the pandemic, the business environment is evolving rapidly. So, as we adjust to a new normal, companies will once again need to think ahead and figure out what lessons still apply, and what has changed now that the pandemic is over.
You can find the podcast here, or wherever you get your podcasts.
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