Now more than ever, employers are trying to respond to the needs of younger employees entering the workforce, establish themselves as “employers of choice” and help keep their employees financially healthy. One way they are doing this is by using advances in HR technology, including tools that make it possible to turn payroll into a daily activity.
The on-demand pay market, also referred to as earned wage access (EWA), instant pay or a daily pay benefit, provides employees same- or next-day pay. It has been around for nearly a decade and is continuing to gain traction.
Why use HR Technology such as on demand pay?
The short answer: to meet employee needs. Along with educational assistance and guidance on financial decisions, many employers in the Healthcare, Manufacturing, Retail and Hospitality industries – which employ large numbers of hourly workers – have begun racing to implement same-day or next-day pay programs for their workers. Why? To attract and retain workers, reduce employee stress and ultimately improve their bottom line.
According to data from the American Payroll Association, 28% of respondents already have or would like access to some or all of their wages on-demand as they earn them instead of waiting for payday. As the on-demand pay market matures, employers in industries with large numbers of hourly workers will need to consider these types of programs to compete.
What are the Benefits of Working with an On-demand Pay Provider?
The benefits of on-demand pay for employees include quicker payments, avoidance of overdraft fees and credit card debt and access to free financial tools and literacy material to reduce financial stress. On-demand pay also is proving to be beneficial to employers by increasing retention, reducing workload for the payroll team and increasing application volume.
Does it make sense to manage on-demand pay internally or to work with a third-party provider.
