Papaya Global's Eynat Guez on the Magic of AI in Payroll, Owning the Payment Rails and Why Younger Generations Are "Unbanking"
OpenAI's ChatGPT aside, Guez says that AI's quiet power is its ability to extract data from documents, which is revolutionizing global payroll processing and payments.
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Papaya Global CEO Eynat Guez on the Magic of AI in Payroll, Owning the Payment Rails and Why Younger Generations Are “Unbanking”
Payroll is about to get way more interesting, and that’s a very good thing for the financial wellness of employees, workers and contractors around the globe. Papaya Global’s Eynat Guez will be the first to tell you—very directly—that payroll processing is still often viewed as very boring, but the CEO of the cloud-based payroll and payment processing startup is also very clear that the future of platform-based payroll and payment services is anything but, with more transformative innovation on the horizon. Chief among these changes for corporate payroll and finance teams: the impact of artificial intelligence on payroll processing and a dramatic shift in the digital payroll benefits being offered to employees.
Its investors apparently agree: Founded in 2016, Papaya’s latest funding was a $250 million Series D round in fall 2021 led by Insight Partners and joined by Tiger Global Management, with participation from eight existing investors. The funding brought the Israeli startup’s valuation to $3.7 billion; at the time, it had $90 million in annual revenue, representing a 41x revenue multiple. Between 2018 and 2021, Papaya generated more than 300% revenue growth year-over-year for each of those years.
That momentum and the Series D funding gave Guez, along with cofounders Ruben Drong and Ofer Herman, the ability to focus on the acquisition of more rapidly growing, pre- and post-IPO companies and Fortune Global 500 and Fortune 500 companies as clients.
Despite massive adoption of enterprise technology by multinational and global companies over the past 25 years, payroll processing has been stubbornly slow to change, remaining a complex and error-prone patchwork of Microsoft Excel spreadsheet-based data processes laboring to meet the demands of companies that must issue payroll and payments on time, at home and in far-flung regions of the world, while also complying with regulations that vary by country where they have operations.
That accounts for some of the change that must happen, but Guez also contends that most existing payroll systems being used by companies fail to address the next generation of payroll. Employees’ expectations of payroll services are radically changing as younger generations of workers want additional digital benefits tied to their earnings. With its acquisition of e-money transfer startup Azimo and two key partnerships with J.P. Morgan and Citibank that simplify cross-border payroll transactions and guarantee employees are paid on time, Papaya Global is working to power its payroll and payments platform forward, introducing new capabilities and features in 2025 that are intended to help employers keep pace with changing corporate compliance, legal and regulatory requirements. At the same time, the company is preparing to launch a digital wallet to give employees and other workers more flexibility in how they access their funds and what they can do with their money.
FIN Editor in Chief Holly Sraeel recently interviewed Guez on her pursuit to combine payroll and financial wellness for employees, why artificial intelligence (AI) is the magic bullet that will power payroll, and the debut of employee wallets that will give workers more control and flexibility over their pay through Papaya’s mobile app, including advanced pay. Plus, who could resist getting her two cents on Y Combinator Cofounder Paul Graham’s now infamous viral essay “Founder Mode,” which irritated a lot of female founders. “He’s right,” Guez said—and it doesn’t matter whether you are a female or male founder. “If you bring somebody else in to fill your shoes, it might work, but in 99% of the cases, it's probably not going to work because you need to have the spirit person living the vision.” The transcript has been edited for clarity and length.
FIN: It's amazing that Papaya Global now has more than 2,000 companies as clients—roughly 35% of which are Fortune Global companies—and $7 billion in payroll under management. What industries or types of businesses have been fastest to adopt Papaya’s payroll and payments processing platform?
Eynat Guez: The quickest to respond were obviously the tech innovators because they want to connect everything to everything. They have a very strong business application and tech mindset of “how do I connect everything, and how do I make the data work?” But the most amazing thing to see is the next wave of companies that are currently adopting—very traditional, large-scale multinational companies. Traditionally, when you ask them how they run payroll, they tell you that they have 50 to 80 payroll processors around the globe. Honestly, most of it is long-tail payroll processing providers. [Long-tail payroll is a process that involves managing many countries where a company has a small number of employees in each location.] These companies were the second group to collaborate and adopt very quickly because first, they are in the domain of the problem already—so they know the pain—and second because the pressure they have is coming from multiple things.
Sometimes I hear people say, “I know how to manage this, I don't need you. I have my own Excel spreadsheets. I have my own method. Everything is working perfectly fine.” But then this is not in line with GDPR [the European Union’s general data protection regulation implemented in 2018] and privacy regulation. They want to keep doing things as they have for the last 20 years, but organizations need to adapt to different legislation and regulation for compliance [purposes], which can be a big risk to organizations.
We saw adoption by companies in different industries, such as retail, oil and gas, and telecom, etc. It was very interesting to see in the last year that, as we went up market, we are not replacing a platform solution with a platform solution. We're replacing service with a platform solution, unifying everything for business owners and operators. The payroll transformation and eventually the digitalization that is coming—there’s a lot of noise coming out of the office of the CFO and digitalizing it—is finally getting there. …When we started Papaya seven years ago, I said that in a decade you won't have companies managing payroll using Excel sheets. We’re nearly there.
What about industries or businesses that have been a bit resistant to adopting a payroll and payment processing platform?
It's hard for me to define an industry that has been resistant to adopting. A lot of them are trying to figure out their strategy over the next few years. This is the biggest problem with payroll. I'll give you an example: We are still getting RFPs from big companies that are out there for 50 or 100 years, and it's harder for them to change things fundamentally. We see a lot of multinationals, very traditional companies that are very much behind, and we get RFPs that are five-year project implementations for payroll. Five-year projects don’t really exist. You'll hardly find success stories of companies that decided to implement software and went to a five-year pace. You need to implement everything within 18 months maximum, or incentives and priorities change. It's very hard to create something that you’ll see the ROI in five years’ time. This is also true for us when we are designing Papaya for the future. Everything that we are doing—AI is a great enabler for this—is about how quickly we can go to market. We just enabled a four-week program because you need to create a positive ROI to convince the most traditional people in the organization that the platform brings value. If you drag on that timing, they are always going to debate [whether] they need the innovation.
It’s ironic that some of the hesitation is among multinational companies at enterprise scale. They're the ones that need the platform the most because they're contending with various payroll and regulation obligations in countries around the globe. What’s holding them up?
It’s not that they're not compliant with regulation currently, but they think the cost of compliance with the regulation, the complexity of the process internally is huge, it’s massive. The problem with payroll is that we are just starting to see real technology coming into this domain. I would argue that everything that’s happened in the last decade or so is not technology, it’s more process, so you can eventually consolidate everything into one workflow, but if it's not saving time or it's very hard to implement on the ground, or it's not flexible, then it doesn't make sense. The problem with payroll is, if you have one thousand people on the ground, it's very clear that you need a scalable software solution. …We have companies with 50,000 employees, they have five locations where they have thousands of people, and then they have 20 other locations where they have tens or even fewer people. They need to process payroll for everything, and those small locations take time. Even when we are speaking with big companies like JPMorgan Chase or McKinsey, when we ask them “how many payroll processors do you have currently?” the number is always 60 or 70, which is crazy. If you want to adopt and integrate everything, you need to have a very clear strategy, but you also need to make sure that you have a good solution to make it happen.