Over the past few decades, “real wages” have remained generally stagnant while inflation has steadily increased. This not only affected workers’ hopes of achieving the ever-elusive “American dream,” but also hampered their ability to hold out until the end of the month without looking for extra money. That means accepting a gig job, driving up the credit card bill, or worse, taking out a high-interest loan.
Payday loans, while popular, do little to alleviate financial suffering as they come with high interest payments and other fees. A convenient alternative to these is pay-as-you-go. On-demand pay is a benefit that employers can offer their employees, either by partnering directly with an on-demand pay provider or offering the benefit through their time and attendance or payroll provider. This benefit allows employees to access the money they’ve already worked for, without waiting weeks for their paycheck. For employers who already have on-demand compensation through their time and attendance or payroll provider, no payroll integration or changes are required. Pay-as-you-go provider integrates directly with an employer’s time and attendance or payroll provider to record the number of hours worked by employees to ensure an accurate amount of earnings is instantly accessible to employees.
Rather than relying on payday loans, employees can easily access their earnings before payday, and at the end of the month, the pay-as-you-go provider will automatically deduct that amount from their next paycheck. But there’s a catch: Most of these companies charge a fee whenever employees withdraw their earnings early.
One company that stands out from the rest is Clair, a New York-based fintech company that does not charge either the employer or the employee. With Clair, employees can register and take advances for free, which sets Clair apart from other companies in the same field. Clair issues a Clair Debit Mastercard to employees that they can use to instantly access their earnings without paying fees or interest. The way Clair makes money is through their partnership with Mastercard, which pays them a portion of the revenue they make from every transaction made on Clair Debit Mastercards.
Clair’s model is better suited to meeting the financial needs of workers because it gives them the freedom to access their income without further burdening them with excess fees. Apart from the financial incentives offered by Clair, it also has the potential to improve worker well-being and reduce stress levels. For employers, that means more focused employees, and for employees, that means a better quality of life.