Instant Financial allows employees to receive pay on a daily basis, instead of waiting on a full paycheck.
U.S. employees are taking more control of an ever-evolving labor market. Many are increasingly resistant to waiting a week or two to receive a paycheck?
A nominal, but rapidly-growing number of workers may now draw from their earnings, daily, instead of on the more traditional weekly, biweekly or monthly terms via a new service being offered by startup company Instant Financial.
The service allows employees tap into half of their earned pay on that given day as soon as their shift ends. The opportunity is primarily being offered to hourly workers, many of whom live paycheck-to-paycheck and oftentimes seek dangerous advances such as payday loans just to get by.
“It’s putting everybody in control of their pay,” stated Steven Barha, CEO of Instant Financial. “It’s having a little bit of money when you need it.”
So, how does it work? Employees are notified, generally via their smartphones, at the end of their shifts that they will be given an hour to tap into half their daily pay and are asked if they would like to. If so, the funds are immediately downloaded onto their debit cards. No taxes are deducted until workers receive their paychecks. Also, there’s no fee for workers, although businesses pay Instant Financial $1 per active user each month.
Limiting the available funds to 50% of the paycheck encourages employees to save. And the one-hour frame to draw the money discourages impulse purchases afterward.
Approximately 150,000 workers at 50 companies currently have access to the service, which launched earlier this year. Most clients are restaurant and hotel companies with an abundance of hourly employees, including Dunkin’ Donuts, McDonald’s and Outback Steakhouse franchises, as well as various retailers, staffing agencies and trucking companies, per Barha.
He added that company executives expect approximately 1-million total workers to have access to the service within the coming two years.