It’s fair to say the topic of earned wage access (EWA) or pay on-demand, is attracting much debate, including concerns about financial wellbeing and the administrative burden on HR and payroll teams. As an employer that offers EWA to our own staff and to our customers, here’s CloudPay’s take.
We live in a world where services are accessed on smartphones - banking, shopping, and controlling equipment being obvious examples. As consumers, we expect to run our lives at the touch of a button, and this expectation naturally merges into the employee experience that we offer our people. This consumerization in our working lives explains why EWA is gaining traction in many global businesses.
How does pay on-demand work?
It’s important to distinguish between pay on-demand/EWA which is a benefit provided by employers that gives no-charge access to earned wages, and other solutions that may charge the employee and potentially offer a pay advance. The term ‘earned wages’ is fundamental here.
Pay on-demand effectively allows employees to choose their own payday and so represents a major shift in how employees are paid for the work they do. Instead of receiving pay at fixed intervals - normally the end of the week or month - employees can draw down wages they’ve already worked for as it accrues, in much the same way as they accrue paid leave entitlement. It’s a high-value, low-cost employee benefit that gives unprecedented flexibility and control to individuals to manage their personal cashflow.
Pay on-demand delivers benefits to both employees and employers.
- Flexible pay schedules: employees gain control over when they are paid, allowing them to align pay dates with their personal financial commitments.
- Financial cost control: with instant access to earned wages when needed, employees can access funds if a sudden expense arrived, without incurring debt.
- Mobile app convenience: employees can make payment requests directly from their own devices 24/7, without any need for intervention from the payroll team.
- Continuous pay calculation: as employees accrue pay, they can see their wages build up as it’s earned.
- Supports recruitment: pay on-demand is a selling point in a competitive job market, that can help attract and retain talent.
- Improves reputation: businesses that can show commitment to supporting financial wellbeing through pay on-demand can enhance their employer brand.
- Reduces absenteeism: being able to pay for unexpected bills quickly avoids stress, and on a practical level, can be the difference between being able to pay to travel to work or not. Plus, when employees can see the impact of a day’s work in numbers, they’re less likely to skip one.
- Supports payroll processes: an integrated pay on-demand solution will remove the administrative burden of dealing with pay advance requests or ad-hoc additional payments.
Making pay on-demand international
Offering a consistent benefits proposition across borders is important for employer brands, so an EWA solution that works for all employees, wherever they’re located, is needed. There are currently very few solutions that work globally, and CloudPay is the leader.
For international payroll teams, the operational benefits of attaching a pay on-demand solution to the global payroll system are magnified, and can be significant in terms of cost-efficiency.
Pay on-demand in practice
Multinational food chain, Nando’s is using pay on-demand to attract and retain talent. Their EWA solution supports ~150 employees in Singapore to access their earned wages without having to wait for the next payday.
The Nando’s brand has a stated mission to be purposeful, revolving around its people. They believe that taking care of their people is the key to delivering a fantastic customer experience and business success. This was a key driver in their decision to implement pay on-demand and helps Nando’s Singapore stay ahead of the curve as an employer of choice in the competitive Singapore jobs market.
It’s the future
The early adopters of pay on-demand are predominantly in industries where work tends to be more flexible. Gig economy workers, for example, can see their accessible pay grow in real-time, and get paid for their shift the same or next day. Retail, hospitality and manufacturing are also seeing growth.
I believe the EWA model will become the norm within the next decade. Right now, it’s an innovative way to change employee pay for the better; an opportunity to be progressive and forward-thinking, and a way of supporting employees’ evolving working patterns and lifestyles.