Earned wage access (EWA), also known as “on-demand pay” or “early wage access,” is a financial service that allows employees to access a portion of their earned wages before their regular payday. It gives employees more flexibility and control over their finances by enabling them to access the money they have already made but have yet to receive.
Traditionally, employees receive their wages on a fixed payday, typically biweekly or monthly. However, in many situations, individuals may face unexpected expenses or financial emergencies that require immediate funds. EWA services bridge this gap by enabling employees to access a portion of their earned wages on demand.
As EWA continues to gain traction, more employers are recognizing its value in meeting the evolving needs of their workforce. Its ability to enhance employee satisfaction, improve financial wellness, and attract top talent solidifies EWA as the new industry standard in employee financial benefits.
Let’s explore four compelling reasons to consider implementing on-demand pay in your organization.
Asure’s Payroll service includes On-Demand Pay for your employees at no cost to you. Learn more here.
1. Financial Safety Net for Employees
EWA can be particularly beneficial for employees who live paycheck to paycheck or face financial uncertainty. It can help them avoid expensive short-term loans, overdraft fees, or late payment charges. Additionally, it can promote financial stability and reduce stress by giving employees greater control over their finances and the ability to cover unexpected expenses promptly.
ZayZoon, a provider of on-demand pay services, states that over 80% of the wages accessed by individuals are allocated towards immediate and essential expenses. These expenditures encompass vital payments such as groceries, utility bills, medication, and more. Moreover, a meager 3% of users reported utilizing their EWA for discretionary purposes. Consequently, it becomes evident that a significant number of employees who avail themselves of these on-demand pay solutions require timely access to their funds.
A report from PYMNT.com and LendingClub found that over 60% of Americans live paycheck to paycheck. Some people can’t wait two weeks to get paid.
2. Cheap and Easy for Employers to Implement
Employers can implement on-demand pay by partnering with third-party providers. These third-party providers collaborate with the employer’s payroll system, like Asure, to access employee wage data and enable real-time tracking of hours worked and earnings. As an employer, all you have to do is inform your employees about the on-demand pay benefit and the process for enrollment. Once enrolled, employees can request early access to a portion of their earned wages through the provider’s platform.
But what does all this cost you as an employer? Little to nothing. The costs associated with implementing on-demand pay can vary depending on the provider, the size of the company, and the specific agreement between the employer and the provider. Some providers charge a small fee for each transaction employees make when they access their earned wages early. However, the fees for accessing on-demand pay are significantly lower than those associated with other methods employees might use, like payday loans.
Tate Hackett, the co-founder and president of ZayZoon, describes EWA as a “no-lift, no-cost solution for an employer.” He believes the worst thing that could happen is you make it available, and no employees use it. Conversely, if you make it available and just one employee finds an immense amount of value in it, it’s already worth it.
3. Improved Employee Retention, Recruitment and Productivity
The ability to access earned wages before payday not only impacts employee retention and recruitment but also contributes to increased productivity in the workplace. According to a survey by Visa Insights, 79% of workers are willing to switch to an employer that offers on-demand pay, highlighting the significance of this benefit in a competitive job market. By providing employees the flexibility to access their earnings when needed, organizations can attract top talent and foster a sense of value and engagement among their workforces.
According to Hackett, offering EWA as a benefit in job postings can significantly increase the candidate pipeline, with some employers experiencing a doubling of potential candidates. In today’s competitive talent market, where skilled individuals are in high demand, employers are constantly looking for ways to stand out from their competitors. By implementing EWA, employers can enhance their retention rates and attract new team members effortlessly, reaping the rewards without having to invest substantial additional costs or effort.
As mentioned earlier, implementing on-demand pay reduces financial stress by giving employees access to their wages when needed, allowing them to concentrate better on their work tasks. This newfound financial flexibility empowers employees and enhances their motivation and engagement, resulting in a more productive workforce.
Additionally, EWA helps reduce absenteeism and financial emergencies. By enabling employees to manage their financial needs promptly, EWA mitigates the need for unplanned absences, ensuring a consistent and productive workforce. Furthermore, EWA enhances employee well-being by alleviating financial worries and stress. This directly impacts productivity and engagement, as employees with greater financial stability and effective financial management tools can perform at their best, creating a positive work environment.
4. Access for the Unbanked
On-demand pay can be particularly beneficial for unbanked individuals, meaning they do not have access to traditional banking services or do not have a bank account.
According to a recent Federal Deposit Insurance Corporation (FDIC) survey, 14.1 million American adults are unbanked. These people may find banking too expensive with monthly bank fees and minimum balance requirements. They may have poor credit or banking history that prevents them from opening new accounts. Or they might live too far away from a bank branch, and it’s not feasible.
Many EWA providers can offer alternative methods for distributing funds, such as prepaid debit cards or cash pickup options. These options replace expensive check-cashing services, providing unbanked employees with convenient and affordable access to their wages.
Offering on-demand pay can benefit employees and employers in numerous ways. EWA provides employees with greater financial flexibility, control, and peace of mind by allowing them to access a portion of their earned wages before the scheduled payday. By reducing financial distractions and worries, employees can focus better on their work responsibilities, increasing engagement, motivation, and efficiency. EWA also promotes financial inclusion and allows unbanked employees to access their wages conveniently and affordably.
As for employers, implementing on-demand pay is often a straightforward process that requires minimal effort and cost for employers. Additionally, offering on-demand pay as a benefit can attract top talent and enhance employee retention rates. By embracing on-demand pay, employers can demonstrate their commitment to the financial well-being of their employees, fostering a positive work environment and contributing to overall organizational success.
“The benefits are too obvious, the cost is too low, and such little effort is required to not implement,” says Tate.
Asure’s seamless integration with Zayzoon simplifies the process of Earned Wage Access, providing a quick and easy activation for your employees through email invitations and mobile sign-up. This valuable feature is completely complimentary and seamlessly integrates with your existing Asure payroll service. Participation is entirely voluntary for employees who opt to sign up.
By connecting Asure with ZayZoon, you can offer your employees the secure and convenient benefit of accessing their earned wages early. ZayZoon takes care of funding all early wage access requests, eliminating any risk or liability for you as the employer. The funds are automatically recovered during the next pay run, ensuring a smooth and hassle-free process.
With Asure and ZayZoon, you can enhance your employees’ financial well-being and provide them with greater control over their earnings, all while enjoying the convenience of a fully integrated system that seamlessly supports your payroll services. Learn more here.