A growing number of Australians are jumping into earned wage access, an employer-offered benefit that plugs into existing payroll software, on the back of increasing popularity in the US and UK.
Earned wage access allows employees to access a portion of their earned salary as they need it, as opposed to having to wait until payday. Most providers will allow access to at least 50% of a workers’ earned wages. Employees can access their earned pay via an app – the money instantly transferred into their bank account.
“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,” earned wage access provider, Paytime CEO, Steven Furman said.
“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.”
Independent research commissioned by Paytime shows 81% of Australians would like to be able to access their earned pay before payday.
“Payrolls were introduced monthly or fortnightly due to software limitations and the expense involved in processing them frequently. But times have changed – the way we live our lives have changed. Why should our employer hold our pay for a week, a fortnight or a month?”
In the US, companies providing earned wage access include Paypal, Walmart, McDonalds, Uber, Hilton, and Unilever, while 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,” Furman said.
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. Alternatively, an employer may choose to cover the fee themselves and make it free for their staff to make those withdrawals, or the cost can be shared between both.
“One thing we can’t change in life is that there are always going to be unexpected expenses crop up no matter how good you are at budgeting. Earned wage access gives employees access to their own money to pay for these things so they don’t have to borrow it from somewhere else,” Furman said.