2020 has been an incredibly challenging year for all of us. One meaningful takeaway that we collectively learned during the global health crisis is to appreciate the efforts of everyday workers. From the nurse putting in 16-hour days to the grocery clerk doing a double shift, we acknowledged that our heroes don’t all wear capes. Back in January, right before the COVID-19 pandemic hit us, an article written by the CEO of JUST Capital Martin Whittaker caught my attention. This article was all about raising awareness of employees’ financial struggles, and I was excited to see initiatives that PayPal implemented to help their financially stressed employees. 

Today, I’m really encouraged to see PayPal CEO Dan Schulman take a stand in support of the American Worker by offering his employees on-demand pay.

The news that PayPal is implementing an on-demand pay benefit is not surprising as it fits right in with the fact that many fintech CEOs have a long history of being champions for supporting the financial wellness of employees. Those initiatives include everything from lowering their healthcare costs to increasing pay to creating educational programs on financial planning and health. 

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The global pandemic was a wake-up call for companies nationwide. It was a time of realization for antiquated business processes. On the top of the list was “pay.” Not just the delivery of it, but the entire pay experience. And within months, we saw employers of all shapes and sizes adopting a new way to pay called on-demand pay (and sometimes earned wage access). And once they offered this benefit, these businesses realized reduced turnover, increased productivity and a more engaged, satisfied and financially secure workforce.

One expansive effect of this health crisis is the realization that life happens between paydays — especially when faced with needing cash to buy medicine, food or other necessities. It is no longer a viable option to expect your employees to wait every two or even four weeks to have access to the money they’ve earned. 

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Pay-advance apps have been downloaded millions of times, and more employers are offering them as benefits to workers who need cash.

Americans have become accustomed to summoning just about anything on demand, from groceries to car rides. Now it’s just as easy to get paid when you want.

As the coronavirus pandemic squeezes household budgets, workers and employers alike are increasingly turning to pay-advance apps. They allow users, for a sometimes-optional fee, to request money ahead of payday. One even briefly offered a program for those waiting for slow-to-arrive jobless benefits.

And many customers see them as lifelines.

“I turned to those pay-advance apps to compensate where I couldn’t,” said Tasha Ayala-Spain, an American Airlines employee from Upper Darby, Pa., whose hours were slashed this year. She has used Dave and Earnin to get advances of up to $200 per pay period.

“It wasn’t like a loan to a bank,” said Ms. Ayala-Spain, who sometimes worked 50-hour weeks before the pandemic, loading and unloading baggage, mail and medical equipment from airplanes. “You don’t have to pay interest.”

The appeal is obvious: For a few dollars or less, users can cover a bill that comes due in the middle of a pay cycle or get cash for an unexpected expense, like a wildfire or hurricane evacuation. By tapping their earned but unpaid income early, they can avoid overdraft fees, late charges or worse — more predatory lenders. And come payday, the advance is repaid from their bank account or directly from their paycheck.

But these services, which millions have downloaded, come with question marks. Some customers have sued, regulators across the country are looking into their practices, and consumer advocates fear that the apps are glossy packaging for the kind of lending that can leave users stuck in an expensive cycle of debt.

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