On a previous employment, several years back, when this amazing moment appeared, the secretary in a clear voice announced that the eagle had landed. Which our previous months working. When you get compensated once every month, its a long period between payment, so those initial few days after a week or so of being broke were great. I can even remember when I waited tables and received my little brown envelope of cash that was waiting at the end of every pay period!

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

A lot of workers suffer to save their money from paycheck to paycheck a recent study discovered that over half of employees experience trouble paying their bills between pay periods, and nearly a third said an unexpected expense of less than $500 would make them unable to pay other financial responsibilities. Another study discovered that nearly one in three employees run out of money, even those making over $100,000. 12 million Americans use payday loans each year, and each year $9 billion is collected in payday loan fees. The average annual percentage interest rate (APR) for payday loans is 396%.

According to PayActiv, in excess of $89B are paid in charges by the 90M people living paycheck to paycheck, which is the majority of the US population. Instant payroll can each year save over $25B into employees accounts, just from reduction of insanely high APR costs.

The desire drives innovation

We are on the verge of a new paradigm that has relationship with pandemics or changing work environments, and lots to do with why workers want to receive their pay. Employees, not able to last between paychecks and frustrated from turning to outrageous loans to fill the gap, need to receive their hard-earned pay as and when needed. Over 60% of U.S. workers that have struggled financially between payment periods over the last six months believe their financial circumstances would improve if their employers allowed them immediate availability to their earned wages, without of charge.

Perhaps a few people could consider this a political issue, the truth is it is regarding financial health. Based on SHRM, 4 out of 10 employees are unable to cover an unexpected cost of $400. Their report also references Gartner data that discovered that less than 5% of major US companies with a majority of hourly-paid employees use a flexible earned wage access (FEWA) platform, but it is expected that this will increase to 20% by 2023.

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

Enhancing the worker experience
Providing employees access to their pay on demand could disrupt, perhaps even, deconstruct, the manner in which we collect payroll and observe our paycheck. Currently the potential is noticed, and, in many instances, companies are using it to differentiate their company and attract fresh talent. As an example, to stimulate interest for workers, Rockaway Home Care, a New York care operation, is promoting its flexible pay options on the internet.

Others currently provide on-demand pay where employees complete a shift, they can access their money as early as 3 a.m. the next day. Using an app, employees may transfer their salary to a bank account or debit card. Walmart is another example of a company that offers its workers access to their paychecks. payroll compliance can access pay early, up to eight times per year, without cost. The reaction from employees has been incredible, and Walmart is expecting more and more usage. Meanwhile, Lyft and Uber each provide their workers the ability to be paid after they have earned a certain amount.

The metamorphosis of payroll is not confined to the frequency of payments. Venmo, Zelle, and other app provide flexibility and transaction services that workers currently expect from their paycheck. They want to be able to access their earnings when they want to, not every 2 weeks or a monthly period. Much of this demand has come from the gig economy and Gen Z generations who expect to be able to access the money they have earned when they need it.

The increasing rise of workers without bank relationships
In 2018 it was estimated that more than 1.7 billion adults globally do not have access to a banking relationship. In America, a 2017 survey estimated that 25% of people are either unbanked or underbanked 7% unbanked and 17% underbanked. The report found that people who either do not have a bank account, or have an account, but keep using financial services outside the bank system like payday loans to survive. In the UK, there are in excess of one million people without bank accounts.

There are several consequences of having no banking account. In some cases, it can result in difficulty getting financing or acquiring a home; it also presents employers with specific challenges. How do you process payroll if there is no bank relationship to transfer the money into? As a result, employers are quickly searching for alternative ways to process payroll, especially for hourly paid employees. Some are leveraging pay cards, that are loaded electronically every time a worker gets paid. Those pay cards function the way a debit card does, letting owners to withdraw cash or shop online.

Its clear that instant payroll is something that is going to be part of the payroll wellness discussion for a while to come.