It’s time to modernize how employees are paid.
In this article, we will identify problems that have arisen in the way we pay workers that are providing opportunities for innovators, and how innovators are currently addressing these problems with value-added services in earned wage access (EWA).
What Problems Have Arisen That Provide the Opportunity for Earned Wage Access?
The rise of cashless and on-demand payments, and the gig economy have accelerated the need for modernized payments technologies. This need to update our payment systems comes from a few current changes in the way businesses do payments:
1. Outdated Payments Technology
Many businesses are still issuing paper checks or using paycards that cost unnecessary time and money to manage compared with modern methods of disbursement. They’re trying to handle their cash flow in a world that now primarily relies on card payments. Status quo payment methods simply aren’t working. They’re not working for business owners and HR directors, who are overwhelmed with inefficient, sluggish payroll processes and are struggling to manage their cash flow.
2. A Movement Away From the Use of Cash
Cash payments are creating a huge bottleneck in the payments process, creating stress and lost time for businesses.
- Tips are digital, yet need to be cashed out
- Delivery or truck drivers are asked to pay for gas mileage out of their own pockets, and aren’t reimbursed until weeks later.
- Commissions are difficult to manage and disburse using traditional payroll systems.
3. Growth of Hourly Work Force and Gig Economy
- There was a 46% increase in hourly gig job postings in 2021.
- 78% of workers in North America are now living paycheck to paycheck.
Instant payment options help to prevent employees from going into debt, incurring overdraft fees, or payday loans. Gig workers may earn significantly different amounts of money from week to week depending on how many shifts they work. This creates an added need to pay people faster and give them as many tools for financial stability as possible.
Technologies like real-time payments and digital banking are no longer ‘nice to haves’ for businesses, they’re ‘must haves’.
How Can We Solve These Problems? – Earned Wage Access Solutions
This gap between how workers need to be paid, and how they are being paid is proving to be one of the biggest opportunities for innovation. Technology platforms are now being formed to provide solutions to these problems called ‘earned wage access platforms’. EWA provider ‘Earn’ defines earned wage access in the following passage:
“Earned wage access (EWA) can go by lots of names, like early wage access, on-demand pay, instant pay, daily pay benefit, or earned income access. But all these names refer to a solution that does the same basic thing: It helps employees access wages they’ve already earned before payday comes. This helps employees manage cash-flow emergencies using their own resources, while avoiding credit card debt or other predatory financial solutions like payday loans.”
Most earned wage access platforms offer a bundle of services that help to offer digitized wage payments with more flexibility in payment schedule. These services usually include:
- Ways to quickly onboarding gig workers
- Account creation automation
- Deposit accounts
- Cash advances
- Virtual and physical debit cards
- Real-time payments and transfers
- Banking data integrations
We’ve written another article on how you can build an earned-wage-access solution from scratch, that overviews these features in more depth. The window of opportunity is wide open for companies to build earned wage access and on-demand payment solutions.
Who Should Build an Earned Wage Access Solution?
The opportunity of Earned Wage Access doesn’t just stem to founders of earned-wage-access providers. Existing technology companies can also benefit from adding an earned-wage-access solution to their existing service suite. On-demand payment solutions can add value to companies in the following business types:
- Payroll Platforms
- Workforce Management Platforms
- Prepaid Card Providers
- Payment Processing Companies
- Payroll Platforms
- Point-of-Sale Platforms
- Gig-Economy Platforms
- Temporary Work Agencies
or other industries that employee temporary or part time staff.
How Berkeley Payments Can Help to Build Your Earned Wage Access Solution
We’re on a mission to enable businesses with the technology needed to bring us into the modern age of payments. Our Gig Payment Solution offers embedded payments to platforms looking to help businesses pay their workers with instant, digital solutions. We reduce the amount of hours that your clients have to spend on expensive old-school payroll processes and empowers their workers with faster pay and digital banking.
Our solution accomplishes this by providing:
- KYC and user verification tools to securely onboard workers and get them using your product faster.
- Debit Cards and FDIC Insured Accounts that provide the medium for workers to get paid and use their funds whenever and wherever.
- Real-Time Payments and Transfers to pay workers commissions, tips. reimbursements, pensions, or 1099 contractor payments whenever they earn them, all in real-time.
Our Gig Payment Solution offers your clients complete control over the entire payment process from one centralized place. Consider Berkeley Payments as your payments partner in delivering earned-wage-access solutions.
Interested in Setting up a Gig Payments Solution for Your Business?
Berkeley’s payments-as-a-service platform enables all of the financial services capabilities you need to issue cards, transfer funds, and load accounts – all in real-time.