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On a former employment, a few years ago, when this glorious day appeared, the secretary in a loud voice announced that the “eagle had landed.” rewards of our previous month’s work. When you get paid once per month, it’s a long time between payment, so those first few days passed a week or so of being broke were great. I can even remember when I waited tables and collected my own brown packet of cash that was waiting at the end of every week!

Today many of us are paid electronically, but little else has changed.

Many workers struggle to save their money from paycheck to paycheck – a recent study revealed that over half of employees have trouble covering their bills between pay periods, and nearly one third stated a surprise expense of around $500 would make them unable to pay other financial responsibilities. Another study found that almost one in three workers runs out of money, even those making over $100,000. 12 million Americans must use payday loans each year, and annually $9 billion is collected in payday loan fees. The average annual percentage interest rate (APR) for payday loans is 310%.

Based on PayActiv, in excess of $89B are paid in fees from the 90M workers struggling paycheck to paycheck, which is the majority of the US population. Real-time payroll can annually add over $25B into workers wallets, just through reduction of insanely high APR fees.

When need forces creation

We are on the edge of a new way of life that has connection with pandemics or shifting workplaces, and a lot to do with why workers want to receive their payroll. Employees, not able to last between paychecks and tired of turning to outrageous loans to fill the gap, want to access their earned pay as and when wanted. Over 60% of U.S. workers that have struggled financially between pay periods over the last six months believe their financial situation would be enhanced if their employers allowed them instant access to their earned wages, without of charge.

Perhaps a few people could consider this a political point, the truth is it is regarding financial health. Based on SHRM, 4 out of 10 employees are unable to pay an unexpected cost of $400. The report additionally references Gartner data that discovered that less than 5% of large US organizations with a majority of hourly-paid workers use a flexible earned wage access (FEWA) platform, but it is expected that this will grow to 20% by 2023.

Why would global payroll to wait for days or weeks to get paid for their time and skills?

Enhancing the employee relationship
Giving employees access to their pay instantly could disrupt, maybe even, change, the manner in which we collect pay and review our paycheck. Currently the possibility is observed, and, in some cases, companies are using it to differentiate their company and bring in fresh talent. As an example, to encourage applications for workers, Rockaway Home Care, a NY care facility, is promoting its flexible pay options on social media.

Others currently provide on-demand payroll – where workers complete a shift, they can access their money as soon as 3 a.m. the next day. Using an app, employees can transfer their salary to a bank account or debit card. Walmart is yet another case of a company that offers its employees access to their paychecks. Workers may access earnings early, up to eight times per year, for free. The feedback from employees has been incredible, and Walmart is anticipating more and more usage. Meanwhile, Lyft and Uber both provide their workers the ability to be paid after they have earned a certain amount.

The alteration of payroll isn’t confined to the amount of payments. Venmo, Zelle, and other app provide flexibility and transaction services that employees currently expect from their paycheck. They want to be able to access their pay when they want to, not every 2 weeks or a monthly cycle. Most of this demand has come from the emerging economy and Gen Z generations – who expect to be able to access the earnings they have earned when they want it.

The increasing rise of workers without bank accounts
In 2018 it was calculated that more than 1.7 billion adults globally don’t have access to a bank account. In the US, a 2017 survey estimated that 25% of people are either unbanked or underbanked – 7% unbanked and 17% underbanked. The report discovered that workers who either don’t have a bank account, or have an account, but keep using financial services outside the banking system like payday loans to make ends meet. In the United Kingdom, there are over one million people without bank accounts.

There are many results of having no banking history. In some cases, it may result in difficulty receiving financing or buying a house; it also presents companies with specific challenges. How do you process payroll if there is no bank relationship to move the money into? As a result, employers are quickly searching for other ways to process payroll, especially for hourly paid employees. Some are utilizing pay cards, that are topped-up electronically every time an employee receives payment. Those pay cards perform the way a debit card does, allowing holders to remove cash or shop online.

It’s clear that on-demand pay is something that’s going to be a part of the banking health discussion for some time to come.