Invention: Time is of the essence - Not HOW, or HOW MUCH, but WHEN
Definition: A process originated after study and experiment
Today’s workers are battling against systems and circumstances that are designed to exacerbate their struggles.
Overdraft Fees
Returned check fees can range from $25 to $40 and combined with overdraft protection fees. Consumers pay $8 billion in overdraft fees each year.
Bank Fees
Banks have charged consumers over $10 billion in fees simply to maintain a minimum balance required for a checking account.
Pawnshops
A $400 loan from a pawnshop can end up costing $1,000 due to exorbitantly high interest rates ranging from 5% to 25%. Currently there are over 11,000 pawnbrokers in the United States.
Subprime Credit Cards
A subprime credit card can have a credit limit of $300, an annual fee of $49, an account processing fee of $99, a program participation fee of $89, a monthly account maintenance fee of $10, and an APR of over 30%. These add up to over $237 per year just to maintain access.
Payday Loans
The average payday loan costs $15 to $100 in origination fees with ballooning interest rates and APRs around 400% – often trapping workers in an inescapable cycle of debt.
Late Fees & Credit Card Debt
The average household has over $8,000 in credit card debt. Missed credit card payments lead to late fees charges as high as $40 or more within 6 months.
(Courtesy of: Sisodia, R., & Gelb, M. J. (2019). The healing organization: awakening the conscience of business to help save the world. HarperCollins Leadership.)
Imagine a world where people could avoid late fees and predatory money lending methods.
payroll, a history
Why are we paid every 2 weeks?
In 1942, the United States implemented a mass payroll tax for employers to help fund World War II. Everything was done manually, since technology didn’t support electronic transfers at the time. It took businesses a lot of time to deduct the taxes from their workers’ paychecks and then mail the money to the IRS. To balance paying their employees and mailing the money to the government, most companies adopted a two-week, semi-monthly, or monthly pay cycle.
Is EWA a loan?
No.
🚫 No underwriting
🚫 No interest rate
🚫 No collection fees
🚫 No late fees or penalties
🚫 No reporting to credit bureaus
🚫 No credit impact
The amount that a worker accesses is deducted from their next paycheck, meaning there are no repayment processes required.
EARNED
not Early
WAGE
not Income
ACCESS
not Advance
The When of Payday
What comes to mind when you hear the term “payroll?” Most people focus on two parts of the process. 1. How much an employee is paid. For example, $20 an hour or $60,000 per year. Or 2. How an employee is paid. Are they an hourly worker, contractor, salaried employee? This means most businesses are ignoring a third, and critical OR essential, variable – WHEN an employee is paid.
Why wait? If an employee has already worked 40 hours before the next payday, and needs access to $100 of their wages to pay off a credit card bill and avoid interest fees – why should they have to wait an extra week for the money they’ve already earned?
It’s just stuck. The employee had already worked for the money he/she was asking for. It was just stuck in payroll plumbing, waiting to be accessed. How was that the employee’s fault? If they’ve already earned the money, don’t they have a right to use it?
Earned Wage Access answers this question with a simple YES. As an employer you can help alleviate some of the financial stress and empower your employees by humanizing your payroll. When you prioritize your workers, you are part of creating a new, people-focused payroll that challenges outdated pay schedules to the benefit of the employee and the employer.
In fact, 68% of employees with access to Payactiv, when asked, said they primarily use their earned wages for food purchases, while over 50% of them said they spend it on transportation and utilities.
A chat with some of our customers
Dear Diary,
I am in a difficult situation and I know that if no action is taken, the consequences could be disastrous. My mechanic has threatened to send a collector my way unless I pay the remaining $800 for an earlier car repair – this would get reported on my credit score which already isn’t great! I’ve spoken with Neil who gave me John’s number: he offers short-term loans but comes at a cost of 20% interest. This means if I borrow $800, it’ll end up costing me almost double by repayment time.
Dear Diary,
I am in a difficult situation and I know that if no action is taken, the consequences could be disastrous. My mechanic has threatened to send a collector my way unless I pay the remaining $800 for an earlier car repair – this would get reported on my credit score which already isn’t great! I’ve spoken with Neil who gave me John’s number: he offers short-term loans but comes at a cost of 20% interest. This means if I borrow $800, it’ll end up costing me almost double by repayment time.
Anyway I remember I hadn’t caught up with Ayesha in a while. She’s been really crushing it as a working mom lately, while I’m still getting used to the fact that I’m an uncle. She told me something cool about her job at Walmart. Apparently, they’re starting an on-demand pay program. I hadn’t heard about it before but basically, she has this app that lets her keep track of how much money she makes any given day and she can actually access those funds to pay bills and stuff.
What I wouldn’t give for that right now.
Khalid
Anyway I remember I hadn’t caught up with Ayesha in a while. She’s been really crushing it as a working mom lately, while I’m still getting used to the fact that I’m an uncle. She told me something cool about her job at Walmart. Apparently, they’re starting an on-demand pay program. I hadn’t heard about it before but basically, she has this app that lets her keep track of how much money she makes any given day and she can actually access those funds to pay bills and stuff.
What I wouldn’t give for that right now.
Khalid
Explore other sections
Book 1: INCEPTION
Making dreams possible starts with having the dream in the first place. Historically payroll has mostly solved HOW and HOW MUCH an employee is paid. But no one has thought about WHEN employees are paid and how the timing of pay can transform millions of lives. Until now.
Book 3: INNOVATION
Data has proven that Earned Wage Access makes a credible difference to the bottom line and improves financial outcomes. And when you combine that with a collection of tools & resources to help them use their earned wages to reach their money goals, you’re promoting financial wellness.