July 24, 2020
Imagine everyday being payday. For employees, no more waiting for the two-week pay cycle to complete; the freedom of deciding when you get paid. For employers, the ability to reduce workplace turnover while providing an essential service.
Wouldn’t that be nice?
The good news is, an on-demand payments solution is already here and ready for those businesses who want to access it, with significant benefits for employers and employees alike.
So, what’s the hold up?
We’re Stuck in the Past
For years, workers have had to wait until payday to access their earned wages. The traditional pay system might be all we know, but that doesn’t necessarily mean that it has been practical.
The latest crisis has further amplified cracks in the foundation. Our current payday system wasn’t built to withstand unprecedented events. Instead, it has forced more and more people to resort to short-term lending options to come to the aid of expenses and emergencies that can’t wait until the end of the month. And, for the approximately 78% of U.S. workers who live paycheck-to-paycheck, (pre-pandemic, mind you), that’s a lot of undue stress.
There is a better way.
It’s absolutely crucial to establish systems of payment that can improve the financial wellness of workers by providing flexible access to the money that they have earned. Doing so saves time, money and a whole lot of headache. One might even refer to it as risk-management.
On-Demand Pay Benefits Employers, Too
The implementation of on-demand payment capabilities is not only a revolutionary solution for employees, but also a long-term growth opportunity for employers.
The gig economy has already embraced this shift, motivated by a desire to break free from the confines of a strict pay and work schedule, and reposition control into the hands of workers.
In fact, the gig market’s use of on-demand pay systems has granted it a competitive edge. But there is nothing stopping traditional employers from getting in the race.
Major brands like Walmart are already offering employees on-demand pay options, helping them avoid expensive payday loans or late fees while reducing employee turnover and absenteeism rates.
Payroll companies like Ceridien have also embraced the new pay system, enabling users to implement on-demand pay options for their employees.
We predict a growing trend of employees being paid on-demand over the next decade. The sooner companies embrace this movement, the better off they will be.
Domino Effects of On-Demand Pay
Mass adoption of on-demand pay will rely on a mechanism that is low-risk, easy to use, and cheaper.
People are gravitating towards flexibility in every way possible and trying to break down constraints among time and pay. Companies that wish to retain talent and continue growth should embrace this trend, not buck it. Luckily, Qolo stands ready to supply fintechs with the backbone of an on-demand pay system--built and ready to deploy.
And while this shift in how workers are paid will greatly aid both employers and employees alike, it will also draw into sharper focus the plight of the unbanked. For on-demand payment to work, there has to be somewhere for money to be moved to. We’ll likely see increased movement towards prepaid cards and challenger banks for those without traditional banking accounts.
On-demand pay is truly another step in the right direction of supporting an ever-evolving economy, and supporting the workers who make it run.It’s our job as innovators to make sure we can supply businesses not only with the tools, but the foresight.