How On-Demand Pay is Transforming Earned Wage Access

EWA isn't a perfect solution – Clair On-Demand Pay provides employees with free access to money they've already earned at the end of every shift.

The two-week pay cycle has been the standard for the last 100 years: cutting hard checks daily or even weekly would have been an administrative nightmare. Now, push-button direct deposits and electronic payments speed up the process, spurring workers to ask: why do I need to wait two weeks to receive my hard-earned cash?

The weight of a two-week wait between paychecks sounds like a standard operating procedure, but it’s a leading cause of stress for many financially strained workers. When life feels out of control, it’s hard to sleep and eat well—The Better Sleep Council found that 75% of self-rated poor sleepers expressed financial woes. A 2019 study published by the American Academy of Neurology further underscores the issue: money troubles take a severe toll on the brain’s executive functions like memory and problem-solving.

Financial stressors aren’t just personal problems. They trickle down into the world around us. Feeling strapped for cash puts a serious dent in workplace productivity—a consequence that can significantly damage bottom lines. Employers are turning to innovative payday tech like on-demand pay to break the cycle of long waits between paychecks and boost employee confidence.

Eliminating the Need for Predatory Payday Loans

Many workers turn to financially risky methods like payday loans to cover their bills to assuage the stress of waiting two weeks between checks. Payday loans aren’t just a one-time band-aid—roughly 75% are taken out by someone who has used them in the past. While many people believe the majority of Americans use payday loans only rarely for emergency expenses such as car repairs, Pew Trusts found that 7 in 10 use payday loans for basic everyday necessities, including gas, groceries, and utility bills.

But these payday shortcuts are actually a financial bait-and-switch. While the fast money looks attractive at first glance, they wind up locking borrowers in debt for five months of the year. The average payday borrower spends over $500 per year in fees alone. That’s equivalent to a credit card with a 400% APR. Imagine paying $4,000 for every $1,000 of credit you use on your card—that’s what it means to get a payday loan.

So, why do payday loans still exist? For a long time, they persisted because there were simply no other options. Fortunately, that is starting to change.

The Emergence of Earned Wage Access

In just the past few years, several companies focused on a new, transformative goal of eradicating payday loans, called Earned Wage Access (EWA). Employers offered EWA as a simple promise to employees: pay a small fee (equivalent to an ATM fee) to access your earnings instantly. In essence, EWA offered a much cheaper and less predatory alternative to payday loans. Employees were happy to get their checks early. Able to pay their bills on time, they were far less likely to look for work elsewhere.

However, most EWA providers only allow employees to access funds via a prepaid card. Others lack financial empowerment tools like bill payment or savings accounts.

The Rise of On-Demand Pay

Changes are bubbling in payday tech in just the last year, promising to transform the game forever. HCM companies, previously focused on time-tracking or payroll processing, started offering their own services that revamped Earned Wage Access into something more—something that creates a better employee experience. Enter on-demand pay.

For the uninitiated, on-demand pay gives you access to your earnings way before your preset payday actually arrives. The fresh spin on the outdated pay cycle is empowering, giving employees peace of mind and control over their money.

Clair On-Demand Pay

Industries from retail to restaurants are experiencing a new kind of payday. At Clair, we’ve helped thousands of businesses unlock paychecks daily, immediately upon punch-out. It’s like having your time clock and an ATM built into one simple product. Best of all, it doesn’t require any additional setup because HR tech platforms like When I Work, 7shifts, Workwell Technologies, and Attendance on Demand have already built it into their core offering. Millions of employees gaining access to Clair On-Demand Pay can be free of predatory loans and steep overdraft fees.

Clair On-Demand Pay integrates directly with users’ time and attendance providers, making it easy for them to sign into their time-and-attendance app, clock out of work, and then immediately access their earnings from that day. You can simply use the debit card you get when you sign up, which works like any other debit card you might use to shop and take care of emergency bills.

This means that employees can get free access to their earnings on their Clair Debit Mastercard right when they finish work. With this card, users can withdraw cash at 40,000 in-network ATMs nationwide, transfer funds to an existing bank account, or make purchases.

And the trend is only skyrocketing upwards. In 2020, Ernst & Young released a study predicting that on-demand pay will be as common as credit card usage in the very near future. We love to hear how the tool helps workers feel more empowered in their lives and more financially confident.

The Bottom Line

Over the next few years, we believe that every modern time-tracking or payroll application will have some kind of on-demand pay. It is truly a breakthrough innovation for workforce management and HCM platforms. And, on-demand pay isn’t just any HR tech innovation; it’s a huge step forward for financial wellness and freedom. When people feel confident about their finances, life feels a little easier and a little less stressful. With Clair On-Demand Pay, we believe this feeling should be accessible to everyone.

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