Financial insecurity is having a dramatic effect on the workplace: The vast majority (69%) of workers are stressed over their finances, according to financial firm John Hancock, with fully 72% admitting to worrying about their personal finances at work, and one in three doing that more than once a week. Meanwhile, some 40% of Americans would struggle to come up with even $400 to pay for an unexpected bill, according to the Federal Reserve.
Enter instant pay apps, which aim to target those problems by giving employee instant access to their earned wages instead of waiting two weeks between paychecks. Doing so, advocates say, can help workers avoid expensive payday loans and avoid late fees.
More companies are turning to instant pay apps like DailyPay and offering them as a benefit to their workers. Hundreds of employers, including Adecco, Sprinkles Bakery, Vera Bradley and Westgate Resorts, now offer DailyPay as a benefit for their employees.
HRE caught up with Jeanniey Mullen, DailyPay’s chief innovation and marketing officer, during the HR Technology Conference and Exposition in Las Vegas to chat about why employers are implementing the benefit, how it helps employees and where instant pay is headed.
HRE: What’s new with DailyPay and with the trend of instant pay in general?
Mullen: It’s [experiencing] amazingly high growth. Last year at this show, I think people were starting to realize what a daily pay benefit was. And now so many companies have rolled it out since. The landscape has shifted from “what is this?” to “how can I get this?”
HRE: It’s definitely a trend I keep hearing more about. What do you think is the reason behind this growth?
Mullen: Eighty-seven percent of Americans live paycheck to paycheck. I was talking to a casino company, and they were saying sometimes their people come to work and don’t have enough money until their next payday to eat. So the casinos have implemented different lunches and breakfasts, not as a recruitment tool, but as an employee management tool. I think the reality of the world has caused people to need to have something that is on-demand access to their earned wages without it being a loan.
HRE: Explain how the app works.
Mullen: As a person works, they can see how much money they have. It’s not like they’re using it like an ATM; they’re using it as they need it. It’s different fees if they want it now or the next day: $2.99 if they want it immediately or $1.99 if they want it the next day. For employers, it costs zero. [Employees] can choose how they get the money—you can have it put on a debit card, a bank account, a pay card—that’s it. You complete [the] transfer and the money is there. You can track what your balance is, you can see how much you earned, how much is available, this is how much you earned, this is when you get paid next.
From a productivity standpoint, a lot of people use this to determine if they need to work more shifts.
HRE: What kind of feedback do you get from employers and employees?
Mullen: Our employers absolutely love it. The first reason [they love it] is because it’s free to implement. It’s very rare to go to a company and say, “Would you like to significantly improve your bottom line for zero?” The ROI is immediately theirs, so it’s easy to sell. Just by showing people how much they make, productivity significantly increases about 3x, turnover is reduced anywhere between 41%-71%. When you reduce turnover, you create significant savings for the companies. Depending on the industry you’re working in, we see a lot of people using it as a competitive advantage. And employees really love it.
HRE: What do you anticipate five years from now, 10 years from now, both for DailyPay the company, and also for instant pay as an employee benefit?
Mullen: Within 5-10 years, I think it will just be the way people get paid.
HRE: You don’t think payday will be every two weeks or every month?
Mullen: I don’t think so. I like to think of MAGGIEs—millennials and Gen Z who get instant everything. When you have two generations growing up getting everything on demand—you can order Uber, you can order Uber Eats, you can DoorDash, you can Venmo—it just makes sense to have payroll do the same thing.