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Workpay has launched Earned Wage Access (EWA) as an employee benefit that will enable employees
Workpay has launched Earned Wage Access (EWA) as an employee benefit that will enable employees to access up to 25% of their salary before payday. Earned Wage Access is not new to the market and is sometimes mentioned alongside salary advances and payday loans. However, the fundamental difference between the EWA by Workpay is that it does not attract any interest since it is not a loan but an innovative way for employees to access their earned wages any day of the month.
The genesis of the product is internal and personal to one of the members of the Workpay founding team. In the initial stages of growth, the company could not manage to pay decent salaries (bootstrapping 101). The employee (who asked not to be mentioned by name) got into trouble when he started borrowing from digital lending apps to cover his monthly budget shortfall.
In a short period, he found himself in a cycle of debt where he was borrowing to pay the other loans. Once the salary came in, he would take it through the repayment cycle of more than four digital loans and end up with USD 100 short. According to his estimation, this was about 25% of his net salary. He took along-term loan from a bank to regularise this situation, and he says that the lessons he learned (in premium tears) have been fundamental to his financial discipline.
This story resonates with many employees who borrow from expensive loans to make ends meet before payday. The high cost of debt that most employees face when they experience financial distress adds to the already dire situation throwing the employee deeper into a debt trap.
Workpay seeks to address this problem by developing an employee benefit to improve employees' financial well-being through employer-backed tools. We aim to provide innovative solutions such as EWA, automated savings, budgeting tools, financial education and coaching geared towards empowering employees to have more control of their money.
EWA has immense benefits for both employers and employees. The employer gets tools to help improve employee engagement, attract new employees, retain talent and improve employee well-being. Addressing employee financial distress leads to improved productivity. The employer does not have to part with cash flow customarily required to pay salary advances in the middle of the month.
The employees get instant access to a percentage of their earned wages at any point of the month, enabling them to deal with emergencies and unexpected expenses without borrowing and paying high-interest rates or late fees and penalties.
Workpay offers a cloud-based integrated payroll software with time and attendance and timesheets tools creating transparency on wages earned. The Workpay mobile app can track clock-ins and clock-outs via GPS for field employees and casual workers whose earnings depend on the number of worked days.
Please sign-up here if you would like us to activate this service for your employees.
An employee can also refer their employer here...
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