During a previous job, a few years ago, when this glorious moment appeared, the secretary in a booming voice announced that the “eagle had landed.” rewards of our previous month’s labor. When you get compensated once per month, it is a long time between payment, so those first few days after a week or so of being without money were fantastic. I even remember when I waitressed and received my little brown packet of cash that was waiting at the end of each week!

These days many of us are compensated electronically, but little else has changed.

A lot of employees suffer to save their money from paycheck to paycheck – a recent study found that over half of employees live with issues covering their expenses between pay periods, while almost a third stated a surprise cost of less than $500 may make them unable to meet other financial responsibilities. Yet another study found that nearly one in three workers runs out of money, even those earning in excess of $100,000. 12 million Americans use payday loans each year, and annually $9 billion is collected in payday loan fees. The average annual percentage interest rate (APR) for payday loans is 310%.

Based on PayActiv, in excess of $89B are paid in costs by the 90M workers living paycheck to paycheck, that is two-thirds of the US population. Instant payroll could each year add over $25B into workers wallets, just from savings from abusively high APR costs.

When need drives creation

We are on the edge of a new paradigm which has relationship with pandemics or shifting work environments, and a lot to do with why people want to receive their payroll. Workers, unable to last between paychecks and tired of turning to abusive loans to bridge the gap, need to access their earned money as and when needed. Over 60% of U.S. workers who have struggled monetarily between payment periods in the past six months believe their financial situation would improve if their employers permitted them instant availability to their earned wages, free of charge.

While a few people might consider this a political issue, the fact is it is regarding financial health. According to SHRM, 40% of workers are unable to cover an unexpected cost of $400. The report also references Gartner information that discovered that less than 5% of big US companies with a majority of hourly-paid workers use a flexible earned wage access (FEWA) platform, but it is thought that this will increase to 20% by 2023.

Why would an employee have to wait for days or weeks to receive pay for their time and skills?

Improving the worker environment
Providing workers access to their pay on demand will disrupt, perhaps even, change, the manner in which we collect pay and view our paycheck. Currently the potential is noticed, also, in many instances, companies are using it to differentiate their brand and bring in fresh talent. For example, to stimulate interest for personnel, Rockaway Home Care, a New York care operation, is promoting its flexible pay options on the internet.

Others are providing on-demand payment – when employees finish a shift, they can access their money as early as 3 a.m. the next day. Via an app, employees can move their pay to a bank account or debit card. Walmart is yet another example of a company that offers its workers access to their paychecks. Employees may access earnings early, up to eight times each year, without cost. The feedback from workers is incredible, and Walmart is expecting increased adoption. Meanwhile, Lyft and Uber both provide their workers the ability to be paid once they have earned a certain amount.

The metamorphosis of payroll isn’t confined to the frequency of payments. Venmo, Zelle, and other app offer flexibility and transaction services that employees currently expect from their paycheck. They want to be able to receive their pay whenever they need to, not every 2 weeks or on a monthly cycle. payrll service of this expectation has come from the gig economy and Millennial generations – who expect to be able to access the earnings they have earned when they want it.

The increasing rise of employees without bank relationships
In 2018 it was calculated that more than 1.7 billion adults worldwide don’t have access to a bank account. In America, a 2017 review estimated that 25% of people are either unbanked or underbanked – 7% unbanked and 17% underbanked. The survey discovered that people who either don’t have a bank account, or have an account, but keep using financial services outside the banking system like payday loans to make ends meet. In the United Kingdom, there are over one million people without bank relationships.

There are many consequences of having no banking relationship. In some cases, it may result in difficulty getting loans or acquiring a house; it also presents employers with specific challenges. How do you process payroll if there is no bank account to move the money into? As a result, employers are increasingly searching for other ways to process payroll, specifically for hourly paid workers. Some are utilizing pay cards, which are topped-up virtually every time an employee receives payment. These pay cards function the way a debit card does, allowing holders to withdraw cash or shop online.

It’s clear that instant pay is something that’s going to be a part of the financial health conversation for a while to come.