Written by New Benefits.
Crossing your fingers for payday to come before your bill’s due date is not a way to live. But for many Americans, it’s a frustrating reality. 78% of U.S. employees live paycheck to paycheck, including those who earn six-figure salaries.
Three in ten Americans have no emergency savings, so if an unexpected financial issue arises before payday, their only solution may be to take out a loan. And even though payday loans have a high interest rates with an average 300% to 700% APR, Americans borrow $90 billion in short-term loans every year.
Unsurprisingly, personal finance is the number one source of stress for employees of any age, gender, and marital status. But counting down the days to payday doesn’t have to be their only saving grace. There’s a new solution in the spotlight: on-demand pay.
Also referred to as instant pay, earned wage access, or income streaming, on-demand pay gives employees access to funds they’ve already earned but have not yet been paid. Here’s how on-demand pay works:
- Employers partner with an on-demand pay platform integrating seamlessly with their payroll system (meaning ZERO cost or administrative hassle for the payroll team)
- With this integration, employers can continue to pay employees according to their pay calendar with no interruption
- Employees can withdraw a portion of their earned wages before payday for a small transaction fee (kind of like an ATM)
- Whatever the employee withdraws is deducted from their upcoming paycheck
With access to their funds when needed, employees are empowered with better financial wellness, mental health, productivity, and morale. Earned wage access has been proven to result in 86% improved job performance, 40% less turnover, and 200% more job applications.
Previously, earned wage access has only been accessible to large enterprises, leaving out a huge population of employees who could benefit from this service. Thankfully this is starting to change.
My Instant Pay integrates with the employer’s payroll system to provide employees with real-time access to the wages they’ve earned. Whether they need to pay a bill, cover an unexpected expense, or are worried about over drafting their bank account, employees can withdraw up to half of their wages when needed.