On-Demand Pay: payroll that works for all - September 2020 Releasing liquidity through On-Demand Pay: the $1tn opportunity - EY
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On-Demand Pay: payroll that works for all Releasing liquidity through On-Demand Pay: the $1tn opportunity September 2020
Contents 1. Executive summary 01 2. Global context 04 3. Employee perspectives 14 4. The On-Demand Pay market 22 5. Harnessing the $1tn opportunity 34 6. Sources36 7. Glossary37 8. Appendix: EY Employee Financial Wellbeing Survey Methodology 38
1 Executive
summary
This report offers a perspective on the On-Demand Pay
market, the broad range of needs it can address for consumers
and the benefits it can generate for employers.
On-Demand Pay offerings enable employees to better align
income and expenses by accessing a portion of their accrued
wages, in advance of pay day, with the remaining portion paid
at the end of the pay period. Unlike salary-based lending or
payday loans, On-Demand Pay does not involve borrowing on
the part of the employee, and usually carries little to no cost.
• Across OECD countries, we estimate that a total of
approximately $1 trillion is accrued in employer payroll
accounts on any given day. This gives a prominent role
for employers, and On-Demand Pay providers, to provide
employees access to this liquidity and, in so doing, create
meaningful societal utility at limited frictional cost.
• The main use case for On-Demand Pay is that of everyday
financial pressures, which we have found to be widespread:
70% of individuals in the UK and US experience financial
stress regularly. Half of these individuals have faced a
financial shortfall between pay periods and encounter this
issue approximately every four months.
• The negative impacts for individuals are considerable:
nearly 75% of those who have experienced financial
difficulties have reported material deterioration in their
health and wellbeing.
• When this stress is carried into the work environment
it manifests as distraction, absenteeism, reduced
performance and ultimately employee turnover. 20% of
employee turnover is attributable to financial stress and we
estimate the combined effect of this to cost employers in
the US and the UK c.$300bn annually.
• Our research points to three main causes of financial
shortfalls, which ultimately translate into diminished
financial wellbeing: emergencies, limited savings, and
timing mismatches between income and expenses.
On-Demand Pay: payroll that works for all | 1
• With emergencies being unforeseeable by definition and
savings being a function of income (which has stagnated in
real terms), the importance of the timing of salary payments
as a means of coping with financial shortfalls cannot be
understated.
• It is important to note, however, that On-Demand Pay
solutions can offer utility not just to lower earners or
individuals of lesser financial means. Access to earned
income can give all employees far greater control over their
finances by enabling them to more effectively align income
with expenses, allowing better budgeting and supporting
their financial wellbeing.
• We are beginning to see evidence of consumer appetite:
80% of individuals in our research have indicated they
would use a form of On-Demand Pay. Moreover, the range
of reasons why consumers would like to access their pay is
wide, spanning emergencies, budgeting and savings.
Whether the full potential of On-Demand Pay is realised
will depend on several factors, such as an accommodating
regulatory environment, alignment with employer priorities
and consumer adoption. What is clear is that it offers a
compelling economic case for employers and materially better
financial outcomes for employees when compared to the many
alternative financing options.
Scope of the report and research approach
• Our report looks at a specific sub-segment of the wider • The primary research was conducted among 4,000
salary linked¹ solutions market — On-Demand Pay; it working-age individuals, on a basis of nationally
does not include any salary-linked lending, payday representative coverage of key demographic factors.
lending or direct lending to consumers. • The research was conducted in April-June 2020, during
• The geographic scope of the report is global, the COVID-19 pandemic. Our sampling methodology
though with a specific focus on UK and US as key was adjusted to include proportional representation
On-Demand Pay markets. of short-term unemployed individuals to reflect the
• Our global approach covers primarily OECD countries. unemployment effects of the crisis.
Occasionally it includes comparable ex-OECD country • More details on the sources of our data and details
data in order to provide more context. of key terms can be found in the glossary and the
• We have commissioned proprietary primary research to appendix of the report.
understand in detail the financial situation of consumers
in the UK and the US markets.
2 | On-Demand Pay: payroll that works for all
Our research, conducted among around 4,000 individuals
across UK and US, shows an unexpected prevalence of
financial pressures affecting lives of employed individuals
of individuals of individuals
72% experience financial
stress at least once 35% fall short on an
expense between
a year2 pay periods3
3
the average number of times per 75%
of individuals report
major impacts on
life and wellbeing as
a result of financial
year individuals struggle to meet
shortfalls5
a financial obligation4
29%
of individuals earning
>$100k experience
difficulties meeting
$1tn
of accrued pay retained in
payments6 employers’ treasuries at any given
point in time in OECD countries7
20%
of employee
turnover attributable
$300bn
the annual cost to employers in
to financial stress8
lost productivity as a result of
employee financial stress9
On-Demand Pay: payroll that works for all | 3
2 Global
context
Review of the financial realities faced by the global employed population and the role
On-Demand Pay can play in enabling a greater degree of financial freedom
At any given point in time, there is approximately Furthermore, workers have seen little increase
$1 trillion of payroll accrued in employers’ in earnings in recent history, with real wages
treasuries across OECD countries, before it is growing on average 0.9% per year11.
paid to employees. This paper takes the view that
At the same time, household finances appear
access to this liquidity could enable employees to
to have taken a turn for the worse. Consumer
take control of their finances and improve their
debt has seen double-digit growth since the
financial wellbeing by aligning more closely their
1990s across all developed economies, while
income and expenses.
gross savings rates have increased by 2%,12
The scale of the opportunity is considerable. before the recent spike driven by lockdown in key
We have conducted research which shows markets.
that over 70% of employed individuals have faced By giving individuals flexible access to their
financial stress over the previous 12 months and wages, On-Demand Pay can play a key role in
would benefit from better access to liquidity. helping households caught in the nexus of these
trends. As one of the cheapest, most transparent
More than 28% of the global working population
and flexible ways of accessing liquidity, On-
is employed on a part-time or temporary basis,10
Demand Pay can help financially vulnerable
without the security and benefits that are
people reduce reliance on short-term, high cost
typically available to permanent staff. More than
credit. Beyond this, it has promising applications
40% of workers today are low earners — or in the
which can enable individuals to achieve greater
bottom quartile of the wage scale.
financial freedom by active budgeting and
making better saving and spending decisions.
4 | On-Demand Pay: payroll that works for all
The $1 trillion opportunity Exhibit 2.1: Pay frequency per income type (UK and US)
(% of respondents, n=4,086)
Almost 70% of workers globally are paid either monthly, or
fortnightly (with two week pay cycles being most commonplace 45% 23% 27% 5%
in the US). 5% 6%
9% 11%
3%
On the basis of this, and taking into account average wages, 10% 10%
we estimate that across OECD countries there is approximately 15% 10%
$1 trillion of accrued salaries earmarked in employers’
treasuries13. 25%
16%
27%
28%
This is liquidity that is otherwise out of reach for individuals
until their contracted pay day.
21%
This report explores how increasing pay frequency, as
30%
facilitated by On-Demand Pay solutions, could help employees 24%
gain greater control over their financial wellbeing.
56%
On one hand, we see potential for On-Demand Pay to help
38%
individuals cope in situations of financial distress, caused by
26% 24%
mismatches in the timing of income and expenses. On the
other, we see it as a source of financial liquidity that creates
1% 1% 1% 1%
opportunities for individuals to save, consume or invest, as
Fixed salary Fixed and Based on On completion
they earn their pay, supporting broader financial wellness.
some variable hours or work of a task
payment completed
On-Demand Pay Exhibit 2.1b: Pay cycle prevalence by country
On-Demand Pay is the term used to describe a category 4%
8%
Daily
of financial products that give employees the ability to 6%
8% Between daily and
draw on their accrued wages before pay day. 13% once a week
Typically offered by a third party provider through 6% 20% Weekly
employers, On-Demand Pay solutions work by calculating
an employee’s accrued pay at a specific point in time, Fortnightly
and making a proportion of these earnings available for Monthly
employees to withdraw in near-real time.
Other
The On-Demand pay provider typically disburses the 52%
69%
funds directly to employees. Employers settle the amount
with the provider, and pay employees the remainder of
their wages when due. On most occasions employees
incur a cost for the service, although services that are
free to employees also exist. 11%
2% 1%
While it is part of a wider category of similar salary-linked UK US
propositions, encompassing salary-linked loans,
On-Demand Pay does not involve borrowing on the part Source: EY Employee Financial Wellbeing Survey, June 2020
of the employee.
On-Demand Pay: payroll that works for all | 5
Global context Exhibit 2.2: Global employment
Labour force (billion of individuals)
Our report examines the potential of the On-Demand Pay 3.5
market at a unique point in time.
3.4
At the time of our research (April–June 2020), almost all
3.3
economies are reporting record-breaking unemployment
3.2
benefits registrations, triggered by lay-offs in response to the
economic fallout from COVID-19. 3.1
Prior to the unprecedented human and economic impacts of 3.0
the COVID-19 pandemic, the employed population of the world 2.9
stood at 3.3bn individuals globally. This is a 65% increase on 2.8
total employment over the last 30 years, with much of this
2.7
growth coming from increases in employment across China
and India. 2.6
2.5
Even before the historic challenges posed by the COVID-19
pandemic, much of the employed workforce was already in a 2.4
precarious financial position.
1990 1995 2000 2005 2010 2015 2020
We see four major trends which are likely to have an impact
on the financial resilience of employees globally: 1) increasing Source: World Development Indicators, EY analysis
part-time employment, 2) diminishing real wage growth,
3) stagnating savings rates and 4) increase in household debt.
6 | On-Demand Pay: payroll that works for all
01 Growth of part-time and temporary
employment
An increasing proportion of the global workforce is in part- standard employment are 40-50% less likely to receive
time or temporary employment, despite headline employment income or other forms of workplace support14.
numbers being on a steady upward trajectory. The post-COVID-19 world could precipitate an acceleration
of this trend. It is normal for recessionary cycles to leave a
Deemed as “non-standard” employment by the OECD, this is
legacy of increased part-time and temporary employment, and
the form of employment that is least likely to give individuals
28% of employees today are already in part-time or
access to collective bargaining. Moreover, individuals in non-
temporary roles (compared to just 7% in 1977)15.
Exhibit 2.3: Temporary and part-time workers
Percentage of temporary and part-time workers, by country
% of workforce
59 % temporary workers
60
% part-time workers
50
45
41 40 40
40
35 35 33
32 32 31 31 31 31 31 31 30
30 30 29 29 29 29 29
30 28 27 26 OECD average
24 23 28%
23 22 21
20
20
15 14
13 13 12
11
10 9 8
0
Chile
Italy
UK
Turkey
Israel
Norway
Czech Republic
Slovakia
Estonia
Netherlands
Mexico
South Korea
Switzerland
Germany
India
Poland
Belgium
Iceland
Slovenia
Luxembourg
Russia
Lithuania
Spain
Hungary
Denmark
Ireland
Australia
France
Sweden
Greece
Croatia
Latvia
Canada
Finland
China
Austria
Portugal
Colombia
New Zealand
USA
Japan
Source: OECD, International Labour Organisation, EY analysis
On-Demand Pay: payroll that works for all | 7
02 Diminishing wage
growth
We have seen real wages (wages discounted for the effects such as the US and the UK, real wages have grown by less
of inflation) across much of the developed world plateau or than 1% per year over the last 10 years16.
decline, implying that the purchasing power for many is muted.
In the developing world, wages have grown strongly (albeit
from a relatively low base), whereas in developed economies,
Exhibit 2.4:Average salary compared to real wages growth
(average salary; $ as of 2018; growth rates 2009–2018; OECD countries)
Average salary (USD) Note: Bubble size depicts labour force population 25 million
OECD average
wage growth 9%
70,000
US
60,000 Switzerland
Netherlands
Denmark Norway
Belgium
50,000 Ireland Canada Germany
Australia
Austria Finland
Sweden
UK France OECD average
40,000 Japan New Zealand Korea, Rep. salary $41.5k
Spain Italy
Israel Slovenia Poland
30,000
Czech Republic Estonia
Portugal Hungary Latvia
Greece Chile Slovak Republic Lithuania
20,000
Mexico
10,000
0
-20 -5 0 5 10 15 20 25 50
2009-18 % growth
Countries below average wage growth make up 79% of the working population
Source: OECD 2109, EY analysis
8 | On-Demand Pay: payroll that works for all03 Stagnating savings
rates
Across OECD countries, 60% of households save less than to a shrinking minority of working households. While we note
10% of their monthly income, don’t save at all, or are net that across many developed economies, savings rates have
debtors. Although there is a range of factors at play such as significantly increased during the COVID-19 pandemic, our
monetary and macro prudential policy at the national level, view is that this longer-term trend of stagnating savings rates
the basic capacity of having access to savings to meet both is likely to persist.
long- and short-term financial needs appears to be available
Exhibit 2.5a: Household savings as a percentage of disposable income (2018)
%
40 35 35
30 26 26
20
20 16 15
13 13 12 12 11 10
10 9 9 9 8 8 OECD average
10 7 7 7 6 6 5 5
4 3 3 3 2 8%
1 0 0
0
0 -1 -2
-4 -5
-10
-20 -17
South Korea
China
Israel
Turkey
Croatia
Luxembourg
Sweden
Mexico
Switzerland
Colombia
Ireland
Germany
India
Chile
Czech Republic
Russia
Netherlands
France
US
Austria
Norway
Hungary
Estonia
Denmark
Belgium
Slovenia
Japan
Australia
Slovakia
Spain
Italy
Canada
Poland
New Zealand
UK
Finland
Portugal
Lithuania
Latvia
Greece
Source: OECD 2019; Chinese National Bureau of Statistics; Government of India Ministry of Statistics, EY analysis
Exhibit 2.5b: Household savings rate as a percentage of disposable income (2000–2018)
11
9 2000
10 9 8 9
7 8
8 2018
6 5 5 5
4
4 3
2 1
0
0
Germany France Japan Italy US Canada UK
Source: World Bank 2018, EY analysis
On-Demand Pay: payroll that works for all | 904 Increasing
debt
Consumer debt-to-income ratios (a measure of credit Exhibit 2.6a: Household debt-to-income ratios
utilisation) have been steadily increasing. Whilst this trend (%;1995–2018; OECD countries)
1995
reversed during the 2008 financial crisis, they are now
141
trending up once more. 140 2018
The average debt-to-income ratio in OECD countries is 120 118
122%17, and 65% of the working age population reside in 105
countries with ratios above 100%. Debt plays a crucial role 99
100 94
in consumption-driven economic growth and has been the
largest driver of GDP growth for countries such as the UK 80
and the US, yet the growing debt-to-income ratios suggest 61
60
that even minor fluctuations in the household income of
certain cohorts may result in financial strain. 40
20
0
UK US Euro area
Source: OECD
Source: OECD 2019, EY analysis
Exhibit 2.6b: Household debt to income ratios
(%; 2018; OECD countries)
%
300 281
250 239 239
223 217
200 189 186 184 182
164
150 145 141 140
127 121 OECD average 122%
115
107 107 106 105 99
100 95 90
87 79 79
70 70 63
58 57 50
47 42 42
50 30
0
Japan
Luxembourg
South Korea
Ireland
Belgium
Italy
Portugal
France
Estonia
Netherlands
Sweden
USA
Germany
Spain
Chile
Czech Republic
Poland
Croatia
Slovenia
Lithuania
Colombia
Latvia
Hungary
Russia
UK
Greece
Denmark
Norway
Switzerland
Australia
Canada
New Zealand
Finland
China
Austria
Slovakia
Source: OECD; Chinese National Bureau of Statistics; Government of India Ministry of Statistics , 2018 EY analysis
10 | On-Demand Pay: payroll that works for allOn-Demand Pay: payroll that works for all | 11
Finances under pressure
If the above statistics described a single household it would For example, in the UK alone, there are a reported 8.3 million
be easy to see how factors such as debt in excess of income, adults who find meeting monthly bills a “heavy burden” and
low savings, and low real growth in earnings could precipitate miss more than two bill payments within a six-month period19.
financial hardship. A further 3 million adults in the UK are in what is commonly
referred to as “persistent debt,” or situations where
There is a substantial body of evidence suggesting that this
individuals have paid more in interest than repaid in terms of
is an issue affecting millions today. Faced with an emergency,
borrowing20.
30% of all households would struggle to come up with 5% of
their annual income within the next month (for example to
meet unexpected medical expense): a sign of financial strain
manifesting on a striking scale18.
Exhibit 2.7: Individuals unable to fund an emergency, by country (%)
In the UK, 1 in 5 households are
% unable to come up with emergency
70 69 funds; in the US, this rises to 1 in 4
62
60 56
53 52
50 45 43
43 42
40 37 37 37
34
31 30
30 29 29 27 26 OECD average
26 26 24 24 30%
23 21 21
20 19 19 19 18 18 17
20 16 16 14
13 11
10
10 7
0
Israel
Mexico
Chile
Czech Republic
Slovakia
Luxembourg
Belgium
USA
France
Austria
Australia
Switzerland
Poland
South Korea
New Zealand
Finland
Colombia
Croatia
Hungary
Portugal
Latvia
China
Turkey
Ireland
Slovenia
Russia
Italy
Estonia
UK
Sweden
Norway
India
Greece
Netherlands
Japan
Germany
Lithuania
Spain
Canada
Denmark
Source: Wolrld Bank 2018, EY analysis
12 | On-Demand Pay: payroll that works for allWider employment context and the increasing responsibilities of
employers
Outside the above four major trends, it is worth considering As these shifts materialise, more and more individuals could
the wider employment context. The nature of work itself, find themselves without the job security, employment benefits,
and what it means to earn a wage, is changing considerably, or regular pay that many enjoy today.
compounding the financial challenges that employees face.
This introduces new complexities to which employees and Providing employees with improved liquidity, in the form of
employers need to adapt. flexible access to their earnings can give them better control of
their finances, improve retention and stem the financial stress
Individuals are retiring later in life and tend to have more
that costs employers billions in lost productivity.
jobs throughout their career. By our estimates, an employee
holds on average 8-10 jobs between the ages of 18 and 5621. On-Demand Pay also offers employers the means to adapt to
This can translate into income shocks and diminished job a world where flexible work — and flexible pay — may soon be
security for employees, as well as higher rates of turnover for the norm.
employers.
Automation and the growth of the gig economy pose another Exhibit 2.8: Employment ratios in the gig economy
set of challenges. Over the next 15 years, 14% of existing jobs
Uber Deliveroo Airbnb Instacart
are expected to disappear as a result of automation, with a
further 32% undergoing radical change22. Employees 22,000 5,000 12,750 12,000
Typified by companies such as Uber, Airbnb, Deliveroo and Drivers/Riders/
3,000,000 60,000 650,000 500,000
Instacart, the gig economy is giving rise to new business Hosts
models which augment permanent personnel with large
Employee ratio 1% 8% 2% 2%
networks of self-employed contractors. Although these
individuals are viewed as suppliers, from a societal standpoint Source: Company websites; Crunchbase; EY research and analysis
they are wage-earning workforce participants.
On-Demand Pay: payroll that works for all | 133 Employee
perspectives
Insights from EY’s Employee Financial Wellbeing research, based on a survey of
c.4,000 working individuals in the US and UK
We have conducted primary research with common with individuals of lesser financial
c.4,000 working age employed individuals across means. Nearly 1/3 of the top quartile earners
the UK and the US to better understand their struggle to meet an expense when it falls due,
financial position and pressures they face. though we hypothesise that these challenges
faced by higher earners are markedly different.
Our findings point to financial challenges on a
large scale. In the previous 12 months, over 70% Nonetheless, the impacts of financial hardship are
of our survey respondents have experienced felt most acutely by lower earners. The impact of
financial difficulties, or a financial worry of lower income means that this segment of society
some form. Half of these individuals struggle tends to be 50% more likely to postpone another
substantially with their finances — they have been expense in order to settle a financial obligation.
unable to meet a financial obligation and tend They also tend to experience the emotional and
to face this issue on average every four months. health effects of financial pressure more acutely
These struggles vary from everyday expenses than those of greater financial means (see
and utility bills, to recurring difficulty with credit Exhibit 3.9).
card bills, rent and mortgage payments. Beyond the support it can provide to lower
earners, we see early evidence of the wider
Although it would be intuitive to assume that
applications of On-Demand Pay solutions. Some
this problem is exclusively the concern of lower
of these include enabling individuals to take real-
earners, financial stress appears to present a time budgeting actions, and to earn interest on
problem across the income spectrum. We have funds they would otherwise be unable to access
found that higher earners face challenges in until payday.
14 | On-Demand Pay: payroll that works for allPerspectives from the
UK and US
The primary research we conducted focused on obtaining a
more detailed understanding of the state of financial wellbeing
of employees.
We surveyed individuals in (or seeking) employment from
across the income, wealth and socio-demographic spectrum.
Overview of individuals’ financial
position
One of our key findings is that everyday financial hardship is
remarkably common. Although liquidity challenges (issues manifesting as a missed
payment) are common for individuals with lower incomes, they
Overall, more than 70% of working individuals across the US
are nearly as common among higher earners. 40% of those
and the UK have experienced some kind of financial stress
earning $10,000 encounter financial shortfalls, whereas the
between pay periods.
figure is 30% for those earning 10 times more (more than
The issue takes on many forms: $100,000).
• 35% of individuals we surveyed were unable to pay a Our findings also show that individuals with higher levels of
critical expense or have had to seek other means to be able debt experience higher incidence of financial shortfalls.
to do so
This suggests debt is one of the key contributors to financial
• A further 37% of individuals have either come close to stress. It also explains the prevalence of liquidity challenges
being in this position before or frequently worry about faced by higher earners, who tend to have higher borrowing
this, highlighting a build-up of financial anxiety for a large capacity and hold nearly three times as much debt as the
number of individuals average respondent in our sample.
Exhibit 3.1: Share of individuals experiencing financial stress
Q: Over the past year, have you ever been in a position where you weren’t able to pay a bill or to meet a critical expense
between pay periods? (% respondents, n=4,086)
72% find it challenging to meet,
or worry about everyday expenses
35% have been in a position where they weren’t
able to pay a critical expense
15% 20% 15% 22% 28%
Yes — I had no funds Yes — but I had to access savings No — but I often come No — but I frequently No — this is not an issue that I
at all available to meet or other own financial resources close to being in worry about have ever experienced or that
the expense(s) to meet the expense(s) this situation this situation has ever worried me
Source: EY Employee Financial Wellbeing Survey, June 2020
On-Demand Pay: payroll that works for all | 15Exhibit 3.2: Prevalence of financial difficulty by income and savings
Q: Over the past year, have you ever been in a position where you weren’t able to pay a bill or to meet a critical expense between pay
periods? (% respondents by income and savings brackets; $/£; n=4,086)
Respondents by income Respondents by savings
10% 10% 8% 8% 9%
13% 13% 14%
21% 17% 17%
21%
26% 27% 11%
16%
19% 22%
21% 43% 25% 6%
21% 22% 31%
23% 6%
19% 7% 28%
15% 9% 15%
15%
16% 9% 15% 22%
17%
14% 18% 24%
18% 14% 18%
20% 21%
21% 25%
23% 22% 27%
22% 20%
22% 23% 60%
20%
22% 48%
44% 17%
34% 15% 30%
24% 27% 27% 23%
18% 20% 19%
13% 13%
8%
Less than
10,000
10,000–
19,999
20,000–
29,999
30,000–
49,999
50,000–
74,999
75,000–
100,000
More than
100,000
I don’t hold
any funds
Less than 100
100–499
500–999
1,000–4,999
5,000–9,999
10,000–50,000
More than 50,000
Yes — I had no funds at all available to meet the expense(s) No — but I frequently worry about this situation
Yes — I had to access savings or other own financial No — this is not an issue that I have ever experienced or
resources to meet the expense(s) that has ever worried me
No — but I often come close to being in this situation
Source: EY Employee Financial Wellbeing Survey, June 2020
16 | On-Demand Pay: payroll that works for allExhibit 3.3a: Prevalence of financial difficulty by Exhibit 3.3b: Amount of unsecured debt held by income
unsecured debt bracket
Q: Over the past year, have you ever been in a position where you Q: What is the estimated amount of your total household debt,
weren’t able to pay a bill or to meet a critical expense between pay excluding mortgage?
periods? (% respondents; $/£; n=4,086) (for individuals facing financial difficulty; $/£; n=2,160)
8%
14% 17% 14% 18% 19,300
20% 19% 22% 23%
9%
11% 16%
28% 32% 21% 26% 18% 14,153
25% 24%
13%
24%
14% 10,463
13%
23% 13% 15% 24%
19% 15%
7,908
23% 26%
23% 20% 16% 5,455
16% 20%
48% 4,308
35% 3,335
18% 20% 19% 21% 20% 22%
16%
I’m not in
any debt
Less
than 500
500–999
1,000–2,499
2,500–4,999
5,000–9,999
10,000–24,999
25,000–50,000
More than
50,000
Less than 10,000
10,000–19,999
20,000–29,999
30,000–49,999
50,000–74,999
75,000–100,000
Over 100,000
Yes, I had no funds available No, but I often worry about this
Yes, I used savings/resources No, I’ve never experienced nor Source: Averages estimated from EY Employee Financial Wellbeing Survey, June 2020
to meet the expense worried about this
No, but I often come close to this
Source: EY Employee Financial Wellbeing Survey, June 2020
On-Demand Pay: payroll that works for all | 17Types of financial problems and their frequency
Falling short on financial commitments is a frequent with the individuals most vulnerable to this being those with
occurrence. limited savings (15% of the population of our survey).
On average, those who struggle to meet a financial The types of commitments that trigger shortfalls are varied.
commitment tend to do so approximately every four months, Nearly 30% of our respondents stated they have struggled with
with only 24% of individuals surveyed reporting a shortfall less meeting credit card payments, making them the most common
than once per year. type of liquidity challenge faced by individuals.
When financial shortfalls do take place, the average amount is Lower earners, however, most often struggle with obligations
£295 in the UK and $320 in the US, or approximately 10-15% of a far more critical importance: nearly 20-25% of bottom
of the median monthly net wage in both countries. quartile earners struggle to pay for daily necessities, rent and
utility payments.
This implies that many individuals’ monthly budgets are
managed tightly, making them susceptible to financial shocks,
Exhibit 3.4: Financial shortfalls: frequency, average amount and types of expenses
Q: How many times a year do you tend Q: What was the approximate amount Q: What is the type of expense or bill that
to have issues with meeting an expense? of the expense you struggled you struggled to pay?
(% respondents) to pay? (% respondents; $/£) (% respondents; more than one
response allowed)
Less than Less than 10 3% Credit card payment 28%
24%
once a year
Once or 10–49 10% Utilities payment 26%
40%
twice a year
Three or four 50–149 27% Everyday necessities 20%
21%
times a year
Nearly every 150–249 26% Emergency
10% 20%
month expenditures
Every 250–500 19%
5% Rent payment 20%
month
More
16% Loan payment 16%
than 500
Household
Source: EY Employee Financial Wellbeing Survey, June 2020 16%
maintenance payment
Tax bills payment 15%
Mortgage payment 15%
Medical bills payment 13%
Large
12%
one-off purchases
Child support payment 5%
Other 3%
18 | On-Demand Pay: payroll that works for allCauses and consequences of financial pressures
The causes associated with short-term financial hardship are Exhibit 3.5: Triggers behind financial difficulties
complex and interrelated. When asked about the triggers
Q: What do you think was the reason why it was difficult to pay a
behind financial challenges, our respondents point to three bill or meet a critical expense between pay periods?
primary reasons: (% respondents; more than one option allowed)
1. Emergencies
Emergency/
2. Insufficient savings unforeseeable 59%
situation
3. Mismatches between income and expenses
Insufficient savings 58%
Expense was
due before 56%
salary was paid
Over-spending 47%
Gaps between
45%
work periods
Variable pay
(e.g., reliance on 37%
commission)
Exhibit 3.6: Approaches to managing in situations
of financial difficulty
The actions that individuals take to cope in these Q: What action did you take to manage the issue?
situations are varied, yet few are without cost. Of the (% respondents; more than one response allowed)
respondents who encountered a shortfall, but managed to
Took money out of
settle it, nearly 70% had to pay interest for an extended savings/brokerage/
period of time, and a similar proportion had to pay late fees or 62%
stocks and shares
charges. account
There is a sizeable population of individuals who, by Try to negotiate with
59%
circumstance or choice, opt to delay (57%) or altogether the other party
avoid/ignore (20%) payment as part of their coping strategy
for situations where they face a liability they are unable Defer payment/ 57%
to fund. The consequences of such decisions can lead to pay late
adverse credit, potentially making a bad situation worse.
Take (other) financial
Although 63% of individuals managed their financial products to enable 40%
difficulty by taking money out of a savings/stocks & shares payment
account, we expect this to be populated by higher earners
(for example those who might pay school fees). Avoid/ignore 20%
Source: EY Employee Financial Wellbeing Survey, June 2020
On-Demand Pay: payroll that works for all | 19Exhibit 3.7: Share of individuals who have not paid a bill or expense to settle another one, by income
(% respondents; $/£; n=343)
15%
13%
10%
9% 9%
8%
7%
Less than 10,000 10,000–19,999 20,000–29,999 30,000–49,999 50,000–74,999 75,000–99,999 Over 100,000
Source: EY Employee Financial Wellbeing Survey, June 2020
The impact of financial difficulty on individuals’ wellbeing can While individuals from across the wealth/income spectrum
be profound. Nearly 75% of individuals reported considerable experience negative consequences from financial hardship, the
negative implications on their work or life situation: 6% had to lowest paid suffer the greatest impact on their health, and the
leave their job, and another 12% took time off work to cope wellbeing of those around them.
with health, or other wellbeing issues.
20 | On-Demand Pay: payroll that works for allExhibit 3.8: Consequences of financial difficulty
Q: What were the implications on your life and work when you last faced issues with a critical payment?
(% respondents who have experienced difficulty in the past, n=2,160)
4%
6%
12% 26% No major impact Health deteriorated;
had to take days off from work
Had to take a second job to Health deteriorated; had to
improve financial situation permanently leave job/lost job
Health deteriorated; Health deteriorated and had to
managed to continue working seek support
15%
Source: EY Employee Financial Wellbeing Survey, June 2020
36%
Exhibit 3.9: Consequences of financial difficulty by income bracket
Q: How would you say the recent experience of not meeting the critical payment impacted you and those closest to you?
(% respondents who have experienced difficulty in the past; $/£; n=2,160)
322 697 857 854 509 343 228
15% 15% 13%
17% 18% 16%
19%
24%
33%
39% 40%
37%
51% 43%
27%
29%
26% 29%
29%
24%
19% 22%
16%
16% 12% 11% 8%
12% 7%
6% 4% 6% 5% 4% 7%
Less than 10,000 10,000 -19,999 20,000 -29,999 30,000-49,999 50,000-74,999 75,000-100,000 More than 100,000
It did not affect me materially, it was a minor inconvenience It made me very worried, and has affected my health
It made me slightly concerned, but I managed somehow It has affected my health, financial situation and that of others
around me
It made me very worried, briefly
Source: EY Employee Financial Wellbeing Survey, June 2020
On-Demand Pay: payroll that works for all | 214 The On-Demand
Pay market
Overview of how On-Demand Pay works in practice, the benefits it offers to employees
and employers, and the provider landscape across the UK and US
Our research points to three main causes of and usually comes at a fraction of the cost of these
regular financial stress: emergencies, insufficient offerings. By enabling flexible access to earned
savings and mismatches in the timing of income income, On-Demand Pay can also help many
and expenses. to make the most of their finances by earning
extra interest on saved income, taking immediate
With emergencies being unforeseeable and advantage of discounts, or budgeting more
savings being a function of wages (with real effectively.
wages stagnating), flexible access to income,
as facilitated by On-Demand Pay, can offer vital The benefits extend to employers as well.
support in situations of financial stress. On-Demand Pay gives employers a powerful tool
to support employee financial wellbeing, which
There is a large population of working individuals in turn helps to improve productivity. Based on
who stand to benefit from this. The majority of the costs of hiring and diminished productivity
employees in the UK and US are paid either every resulting from employee financial stress, we
month (UK) or every two weeks (US): offering estimate the economic cost for employers in the
On-Demand Pay providers an opportunity to bridge UK and US to be approximately $300bn a year23.
the timing gap between financial commitments Beyond this, On-Demand Pay gives employers the
and pay day for many. means to create differentiation in their employee
benefits packages that makes them a more
On-Demand Pay provides an alternative to payday attractive destination for talent.
lending, overdrafts, and credit cards that is simple
22 | On-Demand Pay: payroll that works for allWider context of financial
offerings
Our research shows that regular financial challenges are one
of the most pervasive obstacles to financial wellness. Faced
with these financial pressures, individuals have a range of
choices to manage a short-term financial need that spans
formal and informal options.
Exhibit 4.1: Indicative range of short-term financial options
Indicative Most Least
average cost expensive expensive
Borrow from
Guarantor Salary-linked On-Demand
Solution Payday loan Credit card Store credit Overdraft Savings friends/
loan loan Pay (ODP)
family
Prevalence* Medium Low High Medium High Medium Medium Low High
Cost 70-1500% APR 25-70% APR 12-40% APR 0-30% APR 5-20% APR 4%-10% APR Opportunity cost Free or per Zero/limited
(interest), fees transaction financial cost;
potential social
cost
Typical UK: £5k (up to) UK: £15k (up to) UK: £2-10k UK: £25k (up to) UK: £5k (up to) UK: £50k (up to) Varies by income Income/timing N/A
amount bands dependent
US: $5k (up to) US: $35k (up to) US: $2-10k US: $60k (up to) US: $1k (up to) US: $40k (up to)
(% of salary)
Typical term Fixed Fixed Revolving Fixed Revolving Fixed/flexible Flexible Flexible Flexible/informal
(vs. short term) (med/short (med/short (med/long-term)
term) term)
Key • Proof of • Suitable • Clear credit • Credit record • Clear credit • Clear credit • Ability to save • Contractual • Contacts
requirements regular guarantor record • In store record record (and settled arrangement/ willing and
income • Perm. address purchase • Current • Perm. address debt) agreement able to provide
account with employer sufficient funds
• Contractual • Perm. address • Contractual
arrangement • Perm. address arrangement
with employer • Contractual with employer
arrangement
with employer
*By choice of respondents: Low 15%;
Source: EY Employee Financial Wellbeing Survey 2020; EY market research and analysis
On-Demand Pay: payroll that works for all | 23However, the full spectrum of short-term financial options (see Pay provides the benefit of a potentially better-off, more
Exhibit 4.1.) is not available to all. Our research shows that the motivated workforce through improved financial wellness and
time-sensitive nature of short-term financial pressures creates less financial stress.
urgency, which in turn gives priority to the most convenient
product.
Provider landscape
Convenience takes on different meanings for different
segments. We have reviewed the On-Demand Pay industry in the UK and
the US. This consists of ~15 providers, some of which also
For higher earners, convenience appears to take the form of
have presence in other jurisdictions. In general, the market is
widely available options such as credit cards and overdrafts.
relatively nascent, with the oldest provider launched less than
These products (and their best terms) are only available to
10 years ago.
individuals with a certain level of income and credit history.
Many providers are VC-funded start-ups; Earnd (backed by
The growing use of credit cards as a long-term borrowing
global working capital lender Greensill) is one of the few
instrument is evident in the growth of balances that remain
offerings funded by a significant amount of third-party capital,
outstanding year-on-year.
enabling the business to provide On-Demand Pay free of charge.
Over the last five years, the average outstanding credit
There are also providers such as DailyPay, who are pursuing
card balance has increased 32% and 18% in the US and UK
routes to market through partnerships with large corporate HR
respectively, suggesting that a growing proportion of
software providers and payroll systems.
individuals are only making the minimum credit card
repayments24,25. With APRs in the region of 10% to 30%, this The prevailing revenue model for the majority of providers
represents a relatively expensive form of borrowing. relies on charging employees directly, making the solution
free, or nearly free, for employers. However, at the time of
For lower earners, convenience takes on another form.
writing, provider such as InstaPay and Flexwage have a dual
Struggling from a credit history and affordability standpoint,
revenue model where fees can be levied on both employer
lower earners are more likely to access high-cost credit such
and employees, while Earnd is the only solution that is free to
as payday loans, which may have less stringent borrowing
employees (see exhibit 4.3).
requirements and allow timely (almost instant) disbursement
which, in case of emergencies, is a key factor. On-Demand Pay is emerging as a permanent feature in
employee benefit packages, among a wider range of financial
Our own research indicates that lower earners are also more
wellbeing solutions adopted by employers.
likely to forego a daily necessity, or the payment of a bill in order
to manage an existing financial shortfall. A particularly attractive sector for the On-Demand Pay industry
is the public sector, with Wagestream, Salary Finance, PayActiv
On-Demand Pay solutions are configured to deliver liquidity to
and Earnd targeting healthcare and education in particular.
individuals in a manner that requires no credit record, minimum
income, or any lending terms. As some of the largest employers in many developed
This makes On-Demand Pay well suited to reach segments of economies, local authorities, governmental agencies, national
the population who, driven by the urgency of everyday financial healthcare and educational services have become a key access
pressures can sometimes make expensive choices. point to millions of employees. In the UK and the US alone, the
public sector accounts for ~25m employees in total.
Origins of On-Demand Pay There is evidence of growing competition in the public sector,
with providers differentiating their propositions and shifting
providers towards an “employer pays” model or, in some instances,
The value proposition of On-Demand Pay for employees is pivoting towards freemium models, in the hope that they can
that it allows them to access a proportion of their accrued access a wide pool of customers which can, in the future, be
earnings in advance of payday. For employers, On-Demand monetised with supplementary services.
24 | On-Demand Pay: payroll that works for allHow it works
The On-Demand Pay model works by providers contracting In simple, fixed-term salary cases, the pay is easily pro-rated,
directly with employers who in turn offer the solution to based on the number of days in the pay cycle.
their employees, typically as part of their workplace benefits
In other, more complex scenarios (such as shift-based
package. Under this arrangement, employees can get access
employment), On-Demand Pay providers also integrate into
to their accrued income and draw down part of it flexibly.
rostering and time keeping systems, which enables them
There are two main ways in which providers facilitate access to to understand what proportion of contracted hours have
accrued wages: been worked as a basis of estimate. Some providers also use
location data to estimate time at work in addition to deep
• By providing only the technology to allow the income
integration with employer records.
advance, with the employer funding it, or
For the most part, the process is invisible to employees. They
• By directly funding the income advance when demanded
can request a withdrawal of their earned income via a
by the employee, with no cash flow impacts for the
mobile app or website at any point in the pay cycle. Many
employer
providers give employers the ability to monitor and calibrate
Usually, providers charge both employees and employers for limits; this is key to ensuring employees do not 'over-extend'
these services but a variety of models and approaches are and run into the type of shortfalls On-Demand Pay is meant
present, including solutions which are offered for free. to help them overcome.
Typically, employees are charged each time they draw down Providers are also incorporating tools to support employee
their earned income to date, or in some instances on a flat “financial wellness” in a bid to create access points to other
monthly basis. Employer charging models vary considerably. consumer needs and to create a more compelling employee
They may include initial implementation fees, in addition to benefits pitch to buyers. This includes liquidity planning tools,
ongoing charges and installed user base charges. such as matching income with expenses, financial diagnostic
tools, budgeting and bill tracking.
Operationally, this is done by On-Demand Pay providers
Importantly, many providers are increasingly under a “duty of
integrating into employer HR systems, thereby “reading”
care” obligation where they assume part of the responsibility
payroll as a feed into On-Demand Pay salary calculations. for any hardship arising as a result of employees withdrawing
too much of their income and being unable to cope as a result.
Exhibit 4.2: On-Demand Pay flows and mechanics
On Demand Pay — the flow of finance
1 Employee 5
has accrued On payday,
earnings and employer pays
Employee balance of salary
requests to
withdraw part to employee
of it
6 On payday,
employer settles
ODP provider the amount Employer
advanced by the
ODP provider
2 3 ODP 4
ODP provider provider Employee
verifies time disburses Employee’s withdraws funds
and pay through funds directly to bank account disbursed by
employer records employee’s bank ODP provider
account
Notes: 1. For most providers, attendance systems will inform the amount the employee is eligible to access
Source: EY research and analysis
On-Demand Pay: payroll that works for all | 25Exhibit 4.3a: Overview of On-Demand Pay providers — UK
Cost
Funds Drawdown Disbursement
Presence Founded Employer Employee accessible frequency speed Accessibility¹ Value-added tools
Access 2019² Free $2.15/TRX 0%-50% of No limit Instant Bank account Budgeting, financial
EarlyPay salary guides
2018 Free to public Free 50% of No limit Instant Bank account Expense
sector/varies for accrued management,
Earnd
private sector income saving tools,
financial guides
Hastee Pay 2017 Free 2.5%/TRX 50% of No limit Instant-2 Bank account “Financial wellbeing
salary hours hub” of tools and
planners
Salary 2015 Free $3.75/TRX 50% of Up to 3 Instant Bank account Loans, savings
Finance accrued times/ account
income month
Wagestream 2018 $1.55-$3.40/ $2.20/TRX 30-50% Up to 15 Instant Bank account Budgeting tracker,
employee per accrued times/ earnings tracker,
month income month savings tools
Notes: 1. All companies accessible through mobile apps; 2. Founding year of parent
Source: Company websites; Crunchbase
Exhibit 4.3b: Overview of On-Demand Pay providers — US
Cost
Funds Drawdown Disbursement
Presence Founded Employer Employee accessible frequency speed Accessibility1 Value-added tools
$0-4.99/
Branch Pay 2018 Free $150-$500 No limit Instant-3 days Bank account Budgeting, earning, bill tracking
TRX
$1.99- 100% of Bank account
Budgeting, financial wellness
Dailypay 2015 Free 2.99/ accrued No limit Instant-1 day & prepaid debit
guides, saving tools
TRX income card
Limited P2P lending via other members,
$0-14/ Instant-2
Earnin 2012 Free $100-$500 by capped Bank account health bill assistance, cashback
TRX business days
funds rewards
1 day/
Even Varies based $6-8/ 50% of Determined Bank account or Savings, planning and
20142 available for
Instapay on package month salary by employer cash pick up budgeting tools
collection
Varies based Determined Determined Bank account or Savings, expenditure tracking
Flexwage 2009 $3-5/TRX Instant
on package by company by employer Flexwage Card too
Determined Manage and track savings &
Nowpay 2018 Free TBD Undisclosed Undisclosed Bank account
by company expenses, financial advice
Employee Savings, planning and
PayActiv 2011 $0-5/TRX $0-$500 No limit Instant Bank account
service only budgeting tools, prepaid card
Budget tracker, overdraft
Instant-48
Zayzoon 2014 Free $5/TRX $65-320 Undisclosed Bank account predictor, low balance
hours
notifications, spending insights
Notes: 1. All companies accessible through mobile apps; 2. Founding year of parent
Source: Company websites; Crunchbase
26 | On-Demand Pay: payroll that works for allConsumer attitudes towards Although the only hard requirement is for some form of
paid employment, the industry is evolving to also serve gig-
On-Demand Pay and adoption workers. As an example, Uber uses an in-house On-Demand
Pay offering called InstantPay to disburse payment to their
considerations “gig-employee” workforce up to 5 times a day25.
Our research indicates that consumers appear willing to Exhibit 4.4: Likelihood to use On-Demand Pay by previous
consider using On-Demand Pay offerings. Among our difficulties
respondents, 30% consider themselves likely, or very likely to Q: If you had the option, how likely are you to draw (part of) your
use an On-Demand Pay offering were it to be offered by their earned income before scheduled payday for certain obligations?
employer. (% respondents; n=4,086)
Yet there are nuances in how individuals perceive the relative 15%
21% 21%
benefits of such offerings that are related to prior experience 31%
with financial stress, their financial position and specific 17% 45%
15%
21%
18% 21%
use case. 23% 31%
17% 45%
Those who have experienced a financial shortfall in the past 18% 27% 26%
23%
are twice as likely to consider an On-Demand Pay solution, 24%
27% 25% 26% 19%
when compared to those who haven’t. Experience of past 24%
20%
liquidity challenges also drives a preference for higher 25% 19%
30% 16%
frequency of salary drawdowns, maximum amount available, 26% 20%
30% 24% 16%
and speed of access. 26% 18% 14%
24%
11% 18%
11% 7% 6% 14%
6%
We have found that On-Demand Pay appears to lend itself to a 11% 11% 7% 6% 6%No, I have
Yes, I had Yes, I had No, but I No, but I
wide range of use cases. However, emergencies lead the way no funds to access often come frequently never
in terms of reasons why individuals would consider accessing available to resources close to this worry about experienced
meet the to meet the this nor worried
liquidity through an On-Demand Pay solution. expense expense about this
Among the properties that consumers would value most in Extremely
Extremelylikely
likely Likely
Likely Neutral
Neutral
accessing liquidity through an On-Demand Pay solution, cost, Unlikely
Unlikely Extremely
Extremelyunlikely
unlikely
ease of application and speed of disbursement ranked the Source: EY Employee Financial Wellbeing Survey, June 2020
highest.
Exhibit 4.5: Adoption factors by importance
The importance of cost to consumers is significant in the
Q: What aspects would be most important for you to consider
context of available short-term credit alternatives — many
using a solution which allows you to regularly access part of your
of which carry a significant borrowing cost that makes
earned income? (% respondents; n=4,086)
On-Demand Pay an attractive substitute.
5% 5% 5% 7% 9% 1 Not
11%
Ease of application and speed of disbursement appear nearly 10% 10% 11% important
12%
as important as each other in terms of value drivers for 14%
16% 2
consumers. Both solve for the importance of convenience
29% 29% 30%
in time-sensitive financial situations and cater to the shift of 37% 34%
consumer preference for “on-demand” services. 36% 3
This is a dimension to which all On-Demand Pay offerings
31% 33%
cater. Many providers have done away with the usual sources 34%
of friction associated with traditional borrowing: none of these 29% 29%
26% 4
offerings require credit referencing or a minimum income.
25% 22%
In some cases, even a bank account can be optional as some 19% 15% 15% 11% 5 Highly
On-Demand Pay providers issue their own payment cards or important
Cost How Speed of Amount Tools to How often
integrate with payroll card providers, such as NetSpend, Wisely easy to disbursement you can manage you can
and Visa in the US. apply draw finance drawdown
Source: EY Employee Financial Wellbeing Survey, June 2020
On-Demand Pay: payroll that works for all | 27Exhibit 4.6: Factors of importance for using On-Demand Pay, Exhibit 4.7: Likelihood to use On-Demand Pay,
by previous difficulty by income
Q: What aspects would be most important for you to consider Q: If you had the option, how likely are you to draw (part of)
using a solution which allows you to regularly access part of your your earned income before the scheduled payday for financial
earned income? obligations?
(% respondents, by previous difficulty; n=4,086) (% respondents, by income bracket, $/£; n=4,086)
Frequency of drawdowns available
973 1,216 469 681 865
9% 7% 9%
14% 17% Less than 10,000 20% 7%
12% 11%
18%
18%
973 1,216 469 681 19%
865
9%
33% 35%
7% 9%
14% 17%
12% 11% 38%
18% 37%
18% 38% 10,000–19,999 20% 5%
19%
29% 35%
33%
33%
25%
38% 22%
37% 19%
17% 15% 38%
10% 9% 7%
29% 33% 20,000–29,999 23% 7%
Yes — no Yes — had No — but
25%come No — but worry No — not
22%
funds to access to close to this about this experienced
19%
meet the
17% resources
15% to situation situation nor ever
expense meet1,216
expense 10% 9% 7%about
worried
973 469 681 865
the issue
6% 5% 7% 7% 12%
12% 10% 9% 30,000–49,999 21% 6%
Maximum amount per withdrawal 14%
14%
973 1,216 469 681 865
33%
31%
6% 5% 7%
42% 7%
37% 12%
12% 10% 9% 38%
14%
14%
50,000–74,999 23% 8%
31% 33%
36%
31% 42%
29% 27%
37% 25%
38%
20% 16% 13% 15% 11%
31% 36% 75,000–100,000 24% 10%
29% 27%
25%
20% 16% 13% 15% 11%
Yes — no Yes — had No — but come No — but worry No — not
funds to access to close to this about this experienced More than 100,000 20% 10%
meet the resources to situation situation nor ever
expense meet expense worried about
the issue
Highly unimportant Unimportant Neutral
Important Highly important Likely Extremely likely
Source: EY Employee Financial Wellbeing Survey, June 2020 Source: EY Employee Financial Wellbeing Survey, June 2020
28 | On-Demand Pay: payroll that works for allWe set out the benefits of On-Demand Pay across three example consumer personas and
financial use cases.
01Alan, who lives in UK, earns approximately £1,000 per
month. He has no savings and a poor credit history as
a result of a redundancy a few years ago which meant
he couldn’t pay off his credit card debt or access an
overdraft. The car he uses to go to work every day broke
down on the 15th of the month; he faces a £250 repair
bill. Alan is paid monthly, at the end of the month. His
only option is to take out a pay day loan to pay for the
emergency.
Faced with an APR of between 400% and 1500% due to
his limited credit history, Alan can expect to pay between
£38 and £144 in borrowing costs (interest) were he to
pay the loan off in two weeks’ time, once he is paid his
salary. This is an increase in the overall cost of the car’s
breakdown between 15% and 58%.
Accessing a portion of his accrued salary to date could
enable Alan to altogether eliminate the need for a
payday loan or to considerably reduce the costs of
borrowing, by either borrowing less, or for a shorter
period of time.
On-Demand Pay: payroll that works for all | 2902 Bianca is a professional based in the US. She earns the
median US wage, which is approximately $50,000 per
year. Her monthly earnings after tax are around $3,200.
She is facing an emergency dentist procedure which has
resulted in a $1,000 excess on her health policy. She has
no savings and uses a rewards credit card to pay this bill.
She is one of 38% of individuals who use revolving credit
and carry the balance across month-to-month (average
APR: 18.4%).
Her budget allows her to pay $200 per month, which
means that it takes Bianca 6 months to repay the
principal, incurring total interest of ~$50. If Bianca did
the same but accessed her salary every week, instead
of every month, and made four $50 payments weekly,
she would save ~23% of her interest expense and would
re-pay the credit card debt almost a month sooner.
30 | On-Demand Pay: payroll that works for allYou can also read
