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On a previous job, a few years ago, when this amazing day arrived, the secretary in a loud voice announced that the “eagle had landed.” Then as quickly as possible, we all made our way to her desk to get the Payment for our previous month’s employment. If you get compensated once per month, it is a long time between paychecks, so these first few days after a week or so of being flat-broke were fantastic. I can even remember when I waitressed and collected my own brown packet of cash which was waiting at the end of every week!

These days most of us get compensated electronically, but little else has changed.

Many workers struggle to stretch their pay from paycheck to paycheck – a recent poll discovered that over 50% of workers live with trouble covering their bills between pay periods, and almost one third said an unexpected cost of around $500 could make them unable to pay other financial responsibilities. Another study discovered that almost one in three employees run out of money, even those making in excess of $100,000. 12 million Americans must use payday loans each year, and annually $9 billion is paid in payday loan fees. The average annual percentage interest rate (APR) for payday loans is 310%.

According to PayActiv, in excess of $89B are paid in costs by the 90M workers struggling paycheck to paycheck, which is the majority of the US population. Instant payroll would each year put over $25B into employees accounts, just through savings from abusively high APR fees.

The desire forces innovation

We are on the cusp of a new paradigm which has relationship with pandemics or changing work environments, and a lot to do with how workers want to receive their pay. Employees, unable to survive between paychecks and frustrated from turning to abusive loans to bridge the gap, want to access their earned money as and when wanted. More than 60% of U.S. workers who have struggled monetarily between pay periods in the last six months know their financial circumstances would be enhanced if their employers permitted them immediate access to their earned pay, free of charge.

While various people might think this a political point, the truth is it is regarding financial health. According to SHRM, 40% of workers are not able to pay an unexpected expense of $400. The report additionally references Gartner information that found that less than 5% of major US companies with a majority of hourly-paid workers use a flexible earned wage access (FEWA) solution, but it’s expected that this will grow to 20% by 2023.

Why should an employee need to wait for days or weeks to get paid for their time and ability?

Improving payroll service
Providing workers access to their money instantly might upset, perhaps even, deconstruct, the way we receive pay and review our paycheck. Already its potential is recognized, also, in many instances, companies are using it to differentiate their company and attract new talent. As an example, to stimulate interest for personnel, Rockaway Home Care, a New York care operation, is promoting its flexible earning options on the internet.

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

The metamorphosis of payroll isn’t limited to the frequency of payments. PayPal, Zelle, and other app provide flexibility and transaction services that workers currently expect from their paycheck. They want to be able to access their pay whenever they need to, not every 2 weeks or a monthly cycle. Much of this expectation has come from the gig economy and Millennial generations – they expect to be able to access the earnings they have earned when they want it.

The increasing rise of employees without bank accounts
In 2018 it was estimated that more than 1.7 billion adults globally do not have access to a bank account. In the US, a 2017 review estimated that 25% of households are either unbanked or underbanked – 7% unbanked and 17% underbanked. The survey discovered that people 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 survive. In the UK, there are over one million people without bank accounts.

There are numerous results of having no banking account. In a few cases, it can result in difficulty getting financing or acquiring a house; it also presents employers with specific issues. How do you process payroll if there is no bank relationship to transfer the money into? As a result, employers are quickly looking for alternative ways to process payroll, especially for hourly paid employees. Some are utilizing pay cards, that are loaded virtually every time an employee receives payment. Those pay cards perform the way a debit card does, letting owners to remove cash or shop online.

It is obvious that instant payroll is something that’s going to be part of the payroll wellness conversation for a while ahead.