Xero unveils US payroll & payments push with Gusto

Xero has introduced new payments, payroll and bookkeeping products for the US market, including an embedded payroll service developed with Gusto.

The updates also include new expense management tools from Melio and additional artificial intelligence features for small businesses, accountants and bookkeepers.

Xero Payroll, powered by Gusto, is built into Xero's software, allowing users to manage payroll alongside payments and accounting workflows in one system. It includes unlimited payroll runs, direct deposit, employee and contractor payments, automated federal, state and local tax calculations and filings, benefits calculations, and employee self-service functions.

The launch marks a further push by Xero to grow in the US, where the accounting software group is seeking to widen its product range beyond bookkeeping. By adding payroll to its platform, it aims to reduce the need for customers to use separate software for core finance tasks.

In payments, Xero is expanding Melio, the business payments company it bought in 2025. The latest addition is Melio Expense Management, which lets businesses track and categorise card spending in real time while continuing to use their existing credit cards.

The tool collects receipt data, categorises expenses and syncs them to the customer's accounting software. It is designed to work across accounting platforms rather than only within Xero's own system.

US product push

The group also announced Casper, an AI client manager for accounting firms under the Melio brand. The tool identifies missing information, communicates with clients and gathers documents needed to keep bookkeeping work moving through the month.

Casper is intended to work across different ledgers rather than being limited to Xero users. It sits alongside JAX, Xero's AI platform for automating workflows and generating financial insights within its software.

Matan Bar, US Chief Executive Officer, linked the launches to the company's effort to deepen its market presence.

"Small businesses shouldn't have to stitch together multiple tools to manage their finances, and their accountants shouldn't have to untangle multiple systems to see the full picture," said Matan Bar, US Chief Executive Officer, Xero.

"Today's announcements demonstrate our continued investment in the US market, helping our customers to get more done in one fully unified, AI-powered financial management platform," Bar said.

Payments expansion

Melio has also launched a self-serve business-to-business payout application programming interface, giving developers access to payment methods including ACH, real-time payments, paper cheques, domestic and international wires, and virtual cards. The interface is intended to simplify third-party payment processes, while Melio continues to manage payment execution, compliance, risk and delivery.

Recipients do not need to sign up to Melio to receive funds. The approach is intended to preserve flexibility between payers and payees while widening the range of payment flows software partners can support.

Melio has also expanded its instant payments service so small businesses can make payments outside standard working hours, including at weekends and on holidays. The group presented the move as part of its broader effort to make payment timing more flexible for smaller firms managing cash flow.

Xero said the newly announced products sit within what it calls Xero OS, its AI-focused operating system. It also referred to an internal framework called Accountable Intelligence as the basis for those services.

The announcements show how Xero is tying together assets it has developed internally with products gained through acquisition and partnership. In the US, that means combining its accounting software with payroll from Gusto and payments infrastructure from Melio as it seeks to build a broader finance offering for small business customers and their advisers.

Xero serves 5 million customers worldwide.