The payments FinTech InComm Payments announced on Tuesday (July 20) that it is investing in Instant Financial, a company that provides fee-free earned wage access (EWA) solutions.
Instant helps employees access part of their wages immediately following their shifts by tapping their smartphone. InComm did not disclose the size of its investment.
“The employment landscape remains uncertain for a large portion of the population, with upwards of 70 percent of millennials living paycheck to paycheck – leaving them unsure if they’ll get paid before bills are due, or whether they’ll have to resort to high-interest payday lenders,” InComm said in a news release.
This problem isn’t just something that affects lower-wage workers. As PYMNTS’ research has found, 54 percent of consumers in the United States — 125 million people — live paycheck to paycheck, including 53 percent who make between $50,000 and $100,000 a year.
According to InComm, Instant can help employers attract and keep talent by offering them immediate wage access, giving staff “complete control over their finances.” Instant says its clients have seen rates of turnover and absenteeism drop by 20 to 30 percent.
“In today’s new economic climate, organizations seeking to staff up their workforce are faced with changing employee expectations,” said Tal Clark, CEO of Instant Financial. “Workers are seeking ways to get quicker and easier access to their hard-earned wages, and Instant Pay offers this at no-fee to both employers and employees, without disrupting their existing payroll processes.”
Aside from Instant, the EWA industry is populated by specialists such as Even, Daily Pay and PayActiv, as well as HR platforms like Ceridian. Some companies offer early access to earned wages and advance an amount at the employee’s request. That money is then deducted from the employee’s next paycheck. Other companies provide access to the next check for a fee.
For more on the EWA industry, and how the Consumer Finance Protection Bureau (CFPB) determined that these programs aren’t an extension of credit, read PYMNTS’ report from last year.