DailyPay added capabilities that will allow HCM technology, time management and payroll service providers to offer its on-demand pay services through their product suites. The launch of the product, called ExtendPX, moves DailyPay beyond its traditional offering by opening its services to a range of vendors.
The demand for on-demand pay (an employer-based benefit and payroll process also called earned wage access) has grown exponentially due to its proven ability to reduce turnover, promote worker productivity and boost hiring. Given the triple-digit growth in client demand for on-demand pay, HCM, payroll and TMS companies are quickly realizing the need to embrace this new market.
“Over the past five years, DailyPay has partnered with key HCM and TMS companies in powerful ways,” said Jason Lee, CEO and co-founder of DailyPay. “We have proven that by integrating our gold-standard offering into their platforms, more Americans can enjoy control and flexibility over their pay. After all, it’s their money, and they’ve earned it. This product expansion is just one of the critical steps we are making to move the entire PayExperience industry forward.”
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 Our outdated payroll system wasn’t designed to address the needs of today’s employees.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.
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.