Why wait until payday? A growing number of young Australians are jumping onto earned wage access, an employer-offered benefit that’s already popular in the UK and USA.

Rather than wait until payday, earned wage access gives employees instant salary access to a portion of their salary as they need it. With the cost of living rising, this option is becoming increasingly attractive to the thousands of employees living paycheck to paycheck.

“Up until now if Australians have needed extra money for an unexpected expense the only solutions they’ve had are payday loans, buy now pay later options or credit cards – and they are all putting people into debt,” says Steven Furman, CEO of Earned Wage Access provider Paytime.

“We’re being inundated with requests from employees who want to be able to access their pay, but it’s been harder getting that message through to Australian companies who seem reluctant to invest in their staff’s financial wellbeing,” says Furman.

That’s a bit of a huge call, but earned wage access does seem like a good way for small business to offer an additional employee benefit with little fuss. With the current talent war only getting fiercer, smaller operators need all the arsenal they can get.

What is earned wage access?

Earned wage access or ‘on-demand pay’ is when employees can access their wages as they earn it. Most providers will allow access to a portion of a worker’s earned wages (ranging from 20 – 50 per cent).

It’s an employer-offered incentive and the technology plugs into existing payroll software. Employees can access their earned pay via an app, with the money instantly transferred into their bank account. Because it’s money they’ve already earned there’s nothing to pay back, its not a loan and there are no credit checks required.

“There’s a bit of confusion here about our product, we are not a pay-in-advance app or a payday loan,” says Furman. “We’re actually the opposite as there’s nothing for a person to pay back.”

Little wonder then that the service is attractive to many Australians, especially millennials. Independent Research commissioned by Paytime shows 81 per cent would like to be able to access their earned pay before payday. In the past month, more than 2000 people signed a ‘Paytition‘ – many of them aged between 20 and 35 –  asking their employers to introduce earned wage access.

Who uses earned wage access?

In the US companies providing earned wage access include Paypal, Walmart, McDonalds, Uber, Hilton, Unilever – in fact 80 per cent of Fortune 200 companies now offer earned wage access.

In the UK, doctors, nurses and health workers are provided EWA under the NHS.

Here in Australia, companies who have jumped on board EWA include Pizza Hut, Hungry Jacks, McGrath Estate Agents, Supabarn supermarkets and Aspen Pharmacare, among others.

“Another myth about our product is that it’s only for lower income earners. We have many users on six figure salaries. Some choose to access their wage early to pay down their mortgage faster, others use it to manage cash flow while waiting for company expense reimbursements or others use it to take advantage of investment opportunities,” explains Furman.

What does it cost?

There are several models an employer can choose to implement. The first is free for them but it costs staff an ATM-style fixed fee every time they wish to withdraw their earned wage.

An employer may choose to cover this fee themselves and make it free for their staff to make those withdrawals. Or the cost can be shared between both.

There are a range of options to suit each company – but once they’ve made that choice the heavy lifting is done and the solution integrates seamlessly with payroll.

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Now read this:

https://www.kochiesbusinessbuilders.com.au/want-to-be-a-top-employer-3-ways-businesses-can-lift-employee-satisfaction-and-retention/