How DailyPay Disrupts The Archaic Pay Cycle With A New Financial System | Jason Lee, DailyPay CEO with Kelly Evans on CNBC’s The Exchange

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On April 23, 2021 we had a chance to tell CNBC’s The Exchange about how DailyPay disrupts the outdated pay cycle with a new financial system. DailyPay is a New York based technology company and we work with enterprises and Fortune 500 companies in really just about every industry you can name, from healthcare to restaurants to retail. The way it works is that employers leverage our technology to really offer their employees, I mean, truly a life-changing experience. It’s something that we call on-demand pay. Said simply, employees can now access any part of their pay instantly as they earn it without having to wait for a lump sum on a scheduled payday. Through our technology, any employee can now see exactly what her accrued earnings are, and at a tap of a button have access to any part of those earnings 24/7/365. It’s not a payback. There’s not a loan. There’s just your money and we’re delivering that to you on demand.

We see an entirely new financial system where pay is in fact realtime. The catch, however, Kelly, is it’s really hard to do. For my colleagues who work in the payroll industry, it’s very, very difficult to kind of get all the pieces to work together, whether it be the funding or the technology or the risk and compliance. So that’s what we do. We essentially offer the employee the ability to access daily pay without the employer having to run payroll daily. That’s really the concept behind DailyPay.

Earned Wage Access: CFPB Advisory Opinion

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On 11/30/2020 the Consumer Financial Protection Bureau (CFPB) issued an advisory opinion regarding certain types of earned wage access (EWA) providers. In the document, the CFPB also provided an opinion on a legally ambiguous form of earned wage access that requires an employee to repay advances from a vendor.

In the opinion, the CFPB indicates that programs that require an employee to pay back an on-demand transfer via a payroll deduction and charge fees may be considered extensions of credit. The CFPB has noted that there is no extension of credit in the case of wage deductions only if there are no fees or other restrictions. As noted, DailyPay’s proprietary technology and use of the Non-Payback Model do not and have never relied on employee payback of funds via a payroll deduction or debiting of bank accounts (the CFPB’s analysis only clarifies information around these models — our model is and has always been in full compliance).

By way of background, there are two types of on-demand pay models. The difference between the two is the presence or absence of an employee-directed payback, i.e., an employee obligation to repay.

How Does the Opinion Apply to DailyPay? 

The CFPB opinion does not apply to or impact DailyPay’s model, as DailyPay does not require any form of employee payback. As such, it does not require DailyPay, or any of its employer partners, to make any changes in response to the opinion. The opinion does not provide an “approved” or “endorsed” model. Its sole purpose is to clarify a legally questionable model used by some providers in the marketplace, solely from a federal consumer finance perspective.

DiversityQ: On-demand pay can support your employees’ social mobility and your bottom line

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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.

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Industry Tech Inside: DailyPay – Getting Paid Made Easier & Simpler

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Jason Lee DailyPay

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.

Jason Lee DailyPay CEO Industry Tech Insights Dec 2020 Cover

ThriveGlobal: On-demand pay aligns perfectly with employee financial wellness programs

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paypal even pay on demand

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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Global FinTech Series

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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.

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FinTechZoom: Changing Pay Experience

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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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The New York Times: Apps Will Get You Paid Early, for a Price

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jason lee dailypay article quote

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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Forbes: Helping employees build financial stability

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As we continue to grapple with the effects of the first wave of COVID-19, a second wave feels distant. But another wave of financial challenges is just around the corner. Business leaders can help their employees prepare by empowering them to build savings now, mitigating significant financial worry.

Jason Lee, CEO at DailyPay — the award-winning, gold standard on-demand platform offering comprehensive pay-experience solutions to world-class companies and their millions of employees, including Kroger, Adecco, and Berkshire Hathaway — says the key to preparing for the “second wave” of COVID-19 challenges is helping employees build financial stability now. 

In a new survey of hourly workers jointly conducted by DailyPay and Funding our Future, 50% of respondents said they are either “finding it difficult to get by” or are “just getting by.” Another 40% reported they’re having difficulty paying bills each month. 

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Jason Lee CEO of DailyPay at NYC HQ

The 8th Annual CEO World Awards® Announced Lee as the Gold Winner for Creating the Revolutionary On-Demand Pay Industry

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DailyPay, the gold standard of the on-demand pay ecosystem, today announced that Chief Executive Officer, Jason Lee, has been named the Gold Winner for “Innovator of the Year” for this year’s CEO World Awards.

The CEO World Awards celebrate the accomplishments of leaders and their most outstanding initiatives and achievements. Chief Executive Officers lead the development of the organization’s short- and long-term strategy. This annual awards program recognizes individuals who set industry benchmarks for excellence.

A financial engineer by training, Lee spent nearly two decades on Wall Street creating numerous new products and markets to manage areas of risk. In 2015, he disrupted the calcified world of payroll processing by launching a start-up, which grew into a premiere enterprise software company that promotes financial wellness.

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