Financial services provider Rain has raised what it says is a record $116 million.
Announced Tuesday (March 21), the funding — the most ever for an HR tech firm, Rain said in a news release sent to PYMNTS — will let the company upgrade its platform, which lets employers offer workers on-demand pay or earned wage access (EWA).
“This benefit, also known as ‘income streaming,’ allows workers to access their pay shortly after completing a shift instead of waiting for a payday,” the release said.
The service is free to employers who offer it as a voluntary benefit to workers, who in turn pay a small fee every time they withdraw earned wages. Employees are limited to a 50% withdrawal per pay period to encourage “responsible use,” Rain said.
The company said its service benefits lower-wage workers, who have run into recent challenges — from COVID to the current economic downturn — that’s left them feeling pinched.
“Half of America cannot get access to reasonably priced, transparent financial services products,” said Nigel Morris, managing partner and co-founder of QED Investors, which led the funding round.
“This results in unnecessary stress, anxiety and hardship for millions of people. Companies like Rain are helping to even the playing field by giving hourly workers the ability to access the money they earn faster, providing them with peace of mind, saving them millions in fees, and improving their overall financial health.”
Earlier this year, PYMNTS looked at how EWA can benefit both employees and the companies that employ them.
EWA, or on-demand pay, has been around for several years but has been surging in popularity recently, with one survey showing that 81% of households earning more than $100,000 per year want EWA.
The survey showed that nearly 80% of employees said free EWA would improve their loyalty to their employer, while 79% said it would make them feel more valued as workers.
One company tapping into this desire for EWA is Oglebay, a West Virginia-based resort that began using this system in 2018. Designed to alleviate employees’ personal financial struggles and boost retention, the system currently has 42% of the resort staff using it to pay for a wide range of everyday expenses.
Meanwhile, payroll delay is a big problem for American workers, particularly those involved in the gig economy. Studies have shown that 74% of freelancers haven’t been paid on time. A fifth of them reported being paid one day late, while another 16% said they routinely wait up to two months past when they expected to be paid.