When New York-based cloud payroll provider MyPayrollHR unexpectedly shuttered its doors last month and disappeared with $26 million worth of customer payroll deposits, its payment processor Cachet Financial Services ended up funding the bank accounts of MyPayrollHR client company employees anyway, graciously eating a $26 million loss which it is now suing to recover.
But on Oct. 23 — less than 24 hours before another weekly payroll rush — Pasadena, Calif.-based Cachet threw much of its customer base into disarray when it said its bank was no longer willing to risk another MyPayrollHR debacle, and that customers would need to wire payroll deposits instead of relying on the usual method of automated clearinghouse (ACH) payments (essentially bank-to-bank checks).