Payroll payments solution: How to innovate with Modulr

Modulr By Modulr on 19 September 2023   •   12 mins read

If you’re a product lead at a payroll software platform looking to improve your customer’s experience, providing a payroll payments solution might be one of your priorities. Your customers likely want this functionality because:

  • Leaving your platform to run payroll payments is time-consuming and clunky

  • Downloading and uploading files to make payments can leave room for error and security breaches

  • Slow payment times means more pressure for payroll teams to get salary calculations ready in advance and increases the chances for damaging payment mistakes

  • Reconciling bank statements with the calculations in your system takes manual effort and can compromise accuracy

Resolving these issues will help you build brand loyalty, increase customer retention, and give you the unique selling point you need to stay ahead of your competitors.

To help you understand how to add payments to your software, we sat down with Tom Kelly, a payments industry expert and our director of sales. With his insights, we’ll explain:

Looking for a payroll payments solution for your customers? Modulr is an embedded payments provider that can help you innovate. Contact us today to discover how.

How Modulr can enable integrated payroll payments solutions

Modulr is a leading provider of embedded payments for businesses, including growth-focused payroll companies such as BrightPay and Zellis.

With Modulr, payroll companies can create unlimited new accounts (sort code and account number) and send and receive payments via software, rather than via a bank account. As a company, this opens many new revenue opportunities, reduces costs and allows you to offer your customers a much better user experience.

Currently, as a payroll company, you likely do all the payroll number crunching yourself, including working out payslip details, tax and benefit payments for your customers. Then, when it comes to making a payment, you or your customer has to upload a CSV file to your bank account and make a payment via BACS. It’s incredibly manual, and because it’s via BACS, the payment can take up to 3 working days and introduce additional logistics problems.

With Modulr’s API, your customers can submit payroll details via your platform, and send payments with just a click via Faster Payments. You and your customers save a lot of time, commit fewer errors and payments are instantaneous.

Here’s a step by step of how Modulr’s technology works when implementing a payroll payments solution:

1. Set up an account for each of your customers and their beneficiaries

Once integrated with Modulr, you can set up a unique account for each of your customers on your platform.

You can do so thanks to our authorisations as an electronic money institution (EMI) in both the UK and the EU.

2. Your customer uploads payment details and sends you the total payment

Your customers will send their bulk payment and payroll payment information – including the amount and beneficiary details – directly to their “employer” account and your system. This account-to-account system means data will remain correctly formatted from the start.

Since the customer can load the employee payment details directly on your platform, they never have to handle the upload of a BACS transfer CSV file to their bank.

3. Enable payroll payments directly from your platform

You can set up automatic notifications for customers when it’s time to execute payroll transfers. Your customers only need to click a few buttons on your platform and securely authenticate their credentials. Once done, the payroll payments go out of our system and into the accounts of the employees, tax authorities and benefits providers.

Modulr is connected to all major payment networks in the UK and EU, including direct connection to Faster Payments for near-instant GBP transfers and SEPA Instant credit payments for euro transfers that can settle in as little as 10 seconds.

*Receiving banks or payment service providers need to participate in the SEPA payment scheme in the European Union or the Faster Payments scheme in the UK for payments to settle instantly.

4. Get payroll payment confirmations back immediately

With Modulr, your customers will know the exact status of each payment as soon as it happens.

Our API sends a confirmation as soon as the payment takes place. With that information, you can update the status of your customers’ payroll calculations from pending to complete. This automatic reconciliation saves them the hassle of verifying each payment across multiple windows or programmes.

Curious to see what it looks like in practice? See how Modulr worksin this demo.

6 benefits of working with Modulr to implement your payroll payment solution

Offering payment solutions on top of payroll calculation is becoming a requirement for payroll software platforms. But you don’t want to go through the burden of becoming a regulated payment institution, nor can you use traditional banking services without giving up significant user experience benefits.  Major partners across the accounting and payroll space, such as Sage, MyDigital, Zellis, and BrightPay, choose Modulr to power their payments. Here’s why:

1. Create a payroll payment experience that makes your product stickier

Adding payment functionality to your solution helps solve major pain points for your customers: they no longer need to process payments on a separate platform nor deal with the manual rekeying of data, manual reconciliation and the high risk of error – all of which makes your product a lot stickier.  

And, since Modulr embeds into your existing interface, you don’t have to worry about rebuilding your UI to do this. Instead, you can focus on building out your value proposition through an enhanced customer experience (CX), keeping your customers coming back and bringing new ones in.

2. Reduce damaging manual errors by automating payroll payments and reconciliation

Your customers work hard to get payroll calculations correct for three crucial reasons:

  1. Errors mean extra, time-intensive work for payroll teams during reconciliation

  2. Paying a wage earner the wrong amount deeply damages the employee experience, the employer-worker relationship and brand reputation

  3. They risk receiving fines from the HM Revenue & Customs (HMRC)

Our embedded payments solution minimises these costly payroll mistakes. The entire payment process goes via our API and customers avoid file transfers and manual inputs in a banking portal. Instead, when it’s time for a customer to process payroll, we’ll have all the payment data in place and ready to go, just as your system calculated it.

You can enable automatic payment confirmations via our webhooks to know when payments take place. With those notifications, you can update the payment status for your customers, giving them greater peace of mind around their operational efficiency.

We can also provide your customers access to the Modulr Portal, which enables them to view and manage their account and payment details anytime they like.

payroll payment solution modulr portal

With two ways to access payroll payment data, your customers will always be on top of their payroll transactions.

3. Offer multiple options for global payroll payments

As an embedded payments company in the EU and UK, we give our payroll partners access to the most popular payment methods. For the UK, these include:

  •      Faster Payments that settle in under two minutes

  • Bacs for connection to the largest payment network in the UK

  • CHAPS so that your customers can make bulk top ups for their payroll needs

For the EU, you can use SEPA payments – including instant credit transfers – to pay out beneficiaries in euros.

With multiple payment options, your customers can access their preferred payment channel, reducing the time spent off your platform, minimising errors, and delivering the experience your customers deserve.

4. Have customers make payroll on time with faster payments

Depending on the payment method, the time to settle a salary payment can take three days, or more. For your customers, that means they need to complete their calculations and make payments well before the actual payday. With less time to calculate wages, the risk of mistakes or missing payments increases.

We solve this pain point and speed up payroll thanks to our connectivity to some of the fastest payment systems in Europe. In the UK, we work with Faster Payments, which offers bank-to-bank settlement within 90 seconds at any time of day. In the Eurozone, we use the SEPA instant credit transfers protocol to rapidly settle between accounts.

With Modulr, you can even access payment schemes in different currencies. For example, if your customers need to make payroll in EUR and GBP, you can set them up with one account for payroll in GBP directly connected to UK payment schemes, and one in EUR to use SEPA payment rails. Set up one account for their payroll run in GBP, where you’ll have direct connectivity to UK payment schemes. Create another account in EUR to use SEPA payment rails.

Our connectivity to regional payment schemes and our EMI accounts (which come with a unique account number and sort code for the UK or IBAN for the EU) means you’ll still benefit from automated payments, automatic reconciliation and a reduced margin of error.

Our real-time payment capabilities don't just give your customers more time to get calculations correct. Our payment solutions also make fixing errors much easier.

Suppose one of your customers handles payroll for a gig economy platform and they realise one of the gig workers received 50 GBP less on her last payment than the amount she was due. With instant transfers, your customer can immediately deposit the missing funds into the gig worker’s account. This fast resolution helps solve reconciliation, brand reputation, and employer issues within minutes, not days.

5. Stay compliant and keep funds safe

Payroll data is sensitive as it includes a person’s wage, personal information and bank account details. We segregate and store that information within our systems to the highest standards available.

As a registered and regulated electronic money institution (EMI), we have dual authorisations from the Financial Conduct Authority (FCA) in the UK and de Nederlandsche Bank in the Netherlands for EU markets.

As an EMI licence holder, we’re required to segregate customer funds. For your customers, this means they receive a dedicated account for storing payroll. They can access the information on their accounts whenever they like, either through API calls or via our portal.

6. Be ready to meet your customers’ future payment needs with minimal investment

Creating new products that help our partners solve financial challenges is what drives us as a company. We’re continuously building new solutions for our payroll platform partnerships as trends in the industry evolve. As a Modulr partner, you’ll be able to access them as they roll out, all via our API.

That said, our payment solutions go far beyond payroll processing. Our technology lets you create many unique and powerful payment flows. Splitting payments and triggering event-driven payouts are our most popular features for companies providing earned wage access. We also offer Open Banking solutions which unlock a world of innovation possibility. You can even process your accounts payables via our API.

Do you have an idea for a great payroll payments product for your platform? Let’s explore how we can help you make it happen. Contact us today to get started.

How Modulr helped a UK payroll software company unlock payments

As one of the most well-known payroll software companies in the UK, BrightPay knew payments was one of the biggest feature requests from their customers. The product team searched for various solutions and found Modulr. After reaching out, Modulr quickly convened a support team composed of project, compliance, business and technical experts to see how they could help BrightPay offer payments to its customers.

BrightPay appreciated the proposal, which would:

  • Build a bridge between their payroll calculation data and Modulr’s payment tools, via API.

  • Give each BrightPay customer a dedicated Modulr account.

  • Allow customers to initiate payroll payments directly from BrightPay software.

  • Approve and confirm payments in the Modulr portal.

Overall, the process greatly reduces the time and clicks it takes for BrightPay customers to make payroll. BrightPay also knew from their customers that transaction speed was a pressing issue. To solve that problem, Modulr’s team proposed using the UK’s Faster Payments service to settle bank-to-bank transfers in 90 seconds, instead of the usual three-business-day Bacs cycle.

BrightPay’s product team liked the proposal, and, after onboarding, their tech teams got to work integrating into Modulr’s payment solution. As BrightPay’s developers sprinted through the project, Modulr’s experts were there to provide guidance to ensure a successful implementation. Within only a few months, the project was ready for launch.

The results were immediate. BrightPay customers went from a long, error-filled payroll process to a quick three-step approach:

  1. Calculate payroll

  2. Sync the payroll file to Modulr

  3. Approve the payment securely with just a few clicks

Combined with faster payments and automated reconciliation, BrightPay customers saw their payroll transformed. Now, with Modulr, the already well-known payroll software provider had yet another unique selling proposition for its customers.

Read our entire case study on how BrightPay brings fast, secure payments to payroll with Modulr

Transform your payroll system with Modulr’s payment solution

Now you see how Modulr can help you innovate payroll payments for your employer customers to make your product stickier. With Modulr’s API, your customers can make payroll payments at record speed and automate reconciliation, without having to leave your platform.

If you’re ready to make payments a key feature of your payroll platform, we’re ready to help. Contact us today to get the conversation started.