Have you ever wished you could access your payroll before payday arrives? Well, one solution is access to earned wages or “pay-as-you-go”.
These days we expect everything on demand, and we get things on demand. Think Uber and Netflix…
So why aren’t we paid that way? After all, a day’s work is worth a day’s pay in our pockets. This is where Earned Wage Access (EWA) fits in.
Rather than waiting two weeks or a month to receive your salary, EWA gives employees instant access to a portion of their salary when they need it.
Before going into too much detail and giving it all away, this article will dive into the following:
What is Earned Wage Access?
Popular in the UK and US, Access to Earned Wages (EWA) allows workers to access their earned wages on demand, instead of having to wait 2-4 weeks for their wages.
For example, John earns $50 an hour and has to work 100 hours this month. It is usually paid once a month. After two weeks, John has worked 50 hours, earning $2,500. However, he must wait until the end of the month to receive his salary. With EWA, John can withdraw his earned wages at any time while he completes his work.
“Until now, if Australians needed extra money for an unexpected expense, the only solutions they had were payday loans, buy-it-now options or credit cards – and they all went into debt. people,” said Steven Furman, CEO. from the Paytime earned wage access provider.
“One thing we can’t change in life is that there will always be unexpected expenses, no matter how good you are at budgeting.
“Access to earned wages allows employees access to their own money to pay for these things so they don’t have to borrow it elsewhere.”
Amid the growing cost of living crisis, EWA has become an increasingly attractive option for thousands of employees who live paycheck to paycheck.
It’s important not to confuse EWA with credit cards, payday loans, and prepaid apps. Because there is no loan involved – there are no interest rates, late fees or credit checks.
“There’s a bit of confusion here about our product, we’re not a payday loan app or payday loan. We’re actually the opposite because there’s nothing to pay back for a nobody,” Furman said.
How it works?
According to independent research commissioned by Paytime, 81% of Australians would like to access their wages before payday. But how does it actually work?
An earned wage access provider, such as Paytime, will partner with an employer to offer employees access to a percentage of earned income. This usually varies between 20 and 50% of their salary. To do this, the EWA provider will integrate into the employer’s existing payroll software and human resource management systems. From there, employees can track and access their payroll whenever they need it through an app. If an employee chooses to withdraw cash, they will receive it within minutes (if their bank supports OSKO payments) or within 24-48 hours otherwise.
Any withdrawals made by employees are then taken into account during payroll reconciliation.
Who uses Access to Earned Wages?
Although EWA is still relatively new in Australia, US companies such as PayPal, Walmart, McDonalds, Uber, Hilton and Unilever are offering this feature to their employees. In fact, 80% of Fortune 200 companies now offer EWA.
In the UK, doctors, nurses and healthcare workers receive an EWA as part of the NHS.
Here in Australia, popular businesses such as Pizza Hut, Hungry Jacks, McGrath Estate Agents, Supabarn Supermarkets and Aspen Pharmacare were the first to board the EWA train.
“Another myth about our product is that it’s only for low-income people. We have many users with six-figure salaries,” Furman said.
“Some choose to access their salary earlier to pay off their mortgage faster, others use it to manage their cash flow while waiting for reimbursement of business expenses or others use it to take advantage of opportunities investment.”
What are the benefits of earning access?
Whether you are an employer or an employee, there are certainly a number of benefits you can enjoy with EWA.
Benefits for employers
As an employer, your employees are the backbone of your business.
It’s important to show your employees that you support, appreciate and respect them. Implementing a financial wellness program such as EWA could help you demonstrate just that.
Here are two ways EWA can benefit your business.
Increased productivity and positive work environment
Have you ever heard the expression “a happy worker is a productive worker?” »
If so, you would know that an employee will be inclined to work harder if they feel appreciated, understood, and supported at work.
By offering your employees the EWA option, they can feel like you really care about their financial well-being, which, in turn, can lead to higher levels of productivity and efficiency.
Moreover, it could also promote a positive work environment.
No one wants to work in a negative environment. When employees are financially stressed, it can affect their work attitudes, which could potentially trickle down to other employees.
By implementing an EWA solution, you can alleviate much of the financial stress on your employees’ minds, which, in turn, could create a better working environment.
Benefits for employees
Avoid going into debt
For people who live paycheck to paycheck and have little or no emergency funds, getting into debt is a common occurrence.
Earned salary access can help break the cycle of debt by providing an employee with immediate access to the funds they have earned. It could help them better manage their finances, save money, plan ahead, and prepare for unexpected bills. Therefore, employees may not need to take out a cash advance or payday loan, which typically have high interest rates and relatively short repayment periods.
Creates a financial safety net
It’s no fun when an unexpected bill (like a car accident or dental treatment) comes to your door, especially when you don’t have the funds to pay it.
For those struggling financially, EWA can make them more confident and secure when bills come at an inopportune time or cost more than initially thought.
Reduces financial stress
While EWA doesn’t stop bills from happening (we hope it does…), it does provide a regular income that can allow you to better manage bills as they come in. YOU essentially control your earned pay – you decide when and how much you withdraw.
Due to EWA’s flexibility, you might be in a better financial position to budget and save money, reducing financial stress.
How much does it cost?
According to Paytime, there are several models an employer can choose to implement:
For employers, the first option is to pay nothing (it’s free), but it costs staff a fixed ATM-like fee each time they withdraw their earned salary
The second option is where the employer chooses to cover the ATM style fees themselves and make it free for staff to make the withdrawals.
The last option is to share the cost of the ATM style between the two parties (subsidy model)
How to get access to earned wages
Although as an employee you may want the ability to withdraw cash before your salary, it is up to your employer to present it to staff.
However, PayTime has created a Paytition, where you can fill out a quick and easy form form which allows them to inform your employer about the EWA and its benefits.
The two cents from Savings.com.au
Access to earned pay is different from payday loans.
There’s no interest, no monthly account maintenance fees and you don’t borrow money because it’s all yours!
If your workplace offers an EWA to its employees, it’s important that you don’t get into the habit of using it just because you don’t want to wait until payday to buy yourself something cool like the latest iPhone. . EWA’s main goal is to help Australians reduce financial stress and have backup options in case of unexpected bills.
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