Edgars Lasmanis, Walletto owner and founder, has innovated extensively within the online payment industry. This article will look at the future of payroll and how fintech is paving the way for on-demand pay.
As society increasingly moves to a more on-demand lifestyle, tech-savvy consumers seek instant gratification in their lives, expecting immediate access to news, entertainment and financial services.
Companies are increasingly turning to fintech to revolutionise how they pay their employees, overhauling the traditional function of payroll in recognition of an increasingly on-demand economy. Advances in payroll software have made standardisation, consolidation and regulatory compliance easier to achieve. At the same time, improvements in money movement networks combined with technological advancements are making it easier for companies to cater to changing employee preferences. As a result, many of the employees of today can access a ubiquitous mobile app, utilising new payment methods to provide them with on-demand access to earned wages.
Traditionally, businesses typically ran payroll once or twice a month. However, recent fintech developments are opening up new possibilities for employers in terms of facilitating on-demand payment of earnings. By leveraging a cloud-based money movement, companies can provide their employees with on-demand pay, enabling them to download a mobile app and log in at any time. With this app, they can check how much they have earned to date and draw down funds as and when they need it.
On-demand pay has obvious benefits from the employee’s point of view, providing greater freedom; enabling them to manage financial commitments more effectively; and allowing them to access what is rightfully theirs: their wages.
According to a 2020 EY survey, 80% of participants said they would use a form of on-demand pay. The benefit is not only sought by low-income earners or those of lesser financial means. Rather, it is all about timing and cashflow. With £72 billion in credit card debt outstanding in the UK and $756 billion outstanding in the US, credit cards remain the most common type of debt. For many, the ability to access earned wages sooner combined with money management tools could go a long way towards addressing misaligned cashflow, potentially reducing the cost of credit card debt significantly.
From a business owner’s perspective, providing EWA as part of a benefits package provides employees with a high-value benefit for a relatively low cost to the company. EWA demonstrates the commitment of a business to the wellbeing of its workforce, helping companies to stand out from their competitors in terms of talent acquisition and retention.
EWA is a potentially game-changing development in payroll. Driven by technological innovation triggered by evolving consumer demand, it presents a compelling economic case for employers to show flexibility, prioritising the peace of mind of their employees. Capable of being deployed as an addon to existing payroll systems, it does not add to administrative burden, providing employees with tangible benefits to boost employee wellbeing and improve staff retention.