Why is it that those with the least wealth are often required to front the money for the essentials needed to perform their jobs?
That’s a question that struck me one night when ordering pizza. At the time, I was working as a financial engineer on Wall Street. As I folded my slice in half, I started chewing over an idea. Low-wage workers like pizza delivery drivers — who are essential to our economy and lifestyles, as evidenced by the COVID-19 pandemic — are expected to not only have enough money to sustain themselves and their families but also to front the costs of gas, car insurance, repairs and auto registration.
But it doesn’t have to be this way. Our outdated payroll system wasn’t designed to address the needs of today’s employees. An on-demand pay model, however, can give employees access to earned income, ultimately enabling them to change their socioeconomic status — while improving the bottom line for employers.
Understanding the debt cycle
Due to the nature of the biweekly pay model, workers are required to work for weeks without pay when they start a new job — and they typically must pay for certain essentials and supplies from their own pockets while they wait for their first paycheck. Because they often lack significant savings, this system negatively impacts low-wage and entry-level workers the most.
Restaurant cooks must pay for the public transport or gas required to get to their jobs, in addition to chef’s shoes and other necessities. Teachers are too often tasked with paying for their school and cleaning supplies. Even entry-level white-collar workers must purchase corporate wardrobes, and interns are often asked to use (and therefore pay for) their own laptops.
Any CDO or CTO knows that an evolving tech stack is a key to providing business advancements that improve the company’s bottom line. In today’s HRIS environment, resources are often stretched, so innovation is in great demand. DailyPay delivers on that challenge by offering a full-service on-demand pay platform that reduces turnover, increases productivity, and enhances employee satisfaction, all at zero cost to companies. Through on-demand pay, companies have the potential to save millions of dollars a year without having to change their payroll system.
After implementing DailyPay, companies have found that their turnover rate decreased by 45%, while 56% of their employees were more motivated to pick up additional shifts. With DailyPay’s real-time earnings tracking technology, employees can access up to 100% of their earned pay anytime, so they can pay their bills on time without resorting to predatory loans and overdrafts. As a full-service provider, DailyPay facilitates early pay transactions for millions of workers and produces valuable insights that impact how over 80% of the Fortune 500 companies offering on-demand pay run their business.
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.
How can FinTechs and Payroll Providers Enable Better Capabilities to Help Employees Manage and Access their Earned Pay
There have been countless variables for how the “new normal” is impacting this subsector of FinTechs. Digital acceleration has taken place in telehealth, insurance claim scanning, contactless payments and now on-demand pay. Specifically, on-demand pay ensures employees feel safe and empowered with these new digital experiences, including instant-pay apps on mobile devices.
Why on-demand pay, though? The current bi-weekly payroll cycle has failed to timely and financially cover employees’ necessary and unexpected emergency costs. COVID was an awakening for businesses to abandon the antiquated payroll process and migrate to a digital, contactless pay solution which provides employees access to their earned pay and eliminates the typical two-week wait time until payday. Speed and safety are prioritized through digitization which ends up saving everyone valuable time and money. If you can change the cycle of payments — and make the money earned available when it is needed — you can remove the financial stress of waiting.
DailyPay has emerged as a vital part of the tech stacks of the majority of leading brands in the U.S., saving them a significant amount of money each year. Many restaurant chains, large and small, struggle with employee retention. But, with DailyPay’s on-demand pay ecosystem, DailyPay partners have seen as high as a 72 percent reduction in turnover rates and have saved millions of dollars. According to a recent study, 56 percent of employees have been motivated to pick up more shifts after having access to an on-demand pay solution and 1 in 6 now seek a job with an on-demand pay benefit.
DailyPay, a recognized gold standard of the on-demand pay industry, has been named winner of the 2020 QSR Applied Technology Awards Crew-Facing Category. The award speaks to DailyPay’s unwavering commitment to providing first-class full service to seven of the top 10 restaurant chains in the U.S including and more.
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.
Q: Could you provide our readers with a brief introduction to DailyPay?
A: In 2015, I realized there was a big problem for anyone who received a paycheck. Payroll technology was controlling how families live and pay their bills, instead of the workers determining how and when they access the money they worked so hard to make. There had to be a better way. Despite living in an era of incredible technological advances, I realized there was still this profound need for working Americans to have access to their earned pay that would give them financial flexibility and empowerment over their money. So I took an in-depth look at how people were paid in this country. I saw an opportunity for change — and DailyPay was born. My first thought was to build completely from the ground up, to truly start from scratch.
By creating DailyPay, that’s exactly what we did. In 2016, we designed an unrivaled ecosystem (we call PayExTM) featuring a unique “pay experience” that benefits the employee and the employer. DailyPay offers employees choice and control over when and how they receive their earned pay. Unlike other providers, we support every aspect of the employee’s pay experience from payroll processing to pay access and even call center support. Our ecosystem unlocks the abilities for employers and employees to enjoy control and choice over their earned income.
In just a few years DailyPay was recognized as the gold standard in the industry with over 80% of Fortune 100 companies that offer an on-demand pay benefit using DailyPay as their provider.
• PAY: Employees can control how and when they get paid with instant access to earned income, transparent fees and 24/7/365 access to 100% of their earned income • SAVE: Employees can save their pay in three different ways — scheduled automatically, based on pay period earnings and/or at the time of an instant pay transfer • REWARD: Employers can reward their employees in an on-the-spot, compliant way (i.e., for taking on an extra shift when a coworker calls out) • CYCLE: Employers can easily and immediately process off-cycle payments (ex. missed shifts/termination pay)
The secret behind our success with PayEx is the finely thought out methodology in terms of both our product and the entire customer journey, from start to finish. We are a full service on-demand pay provider – a major differentiator with other providers. We take pride in delivering the “gold standard” of service to our partners and is the reason we are the top choice for Fortune 500 companies.
As a part of his series about “Big Ideas That Might Change The World In The Next Few Years” for Authority Magazine, Fotis Georgiadis sat down with Jason Lee, a fintech entrepreneur and the Founder and CEO of DailyPay, the current market leader in the on-demand pay software sector.
“Ultimately, offering a real-time payment solution is a powerful way to strengthen the bond between enterprises and their employees while saving organizations time and cost. Choosing the right vendor will ensure that enterprises can offer this exciting new benefit (and reap its rewards) without compromising on security,” says Jason Lee, CEO Of DailyPay, in an exclusive interview withEnterpriseTalk.