PYMNTS Intelligence: Workplaces Begin to Offer Instant Payroll in Limited Capacities

Payroll delay is rampant among the American workforce, especially gig workers. Studies have found that 74% of freelance workers have not received their pay on time, with 20% receiving pay one day late and 16% reporting they are regularly not getting paid for up to two months after they expected. A full 59% said clients currently owe them more than $50,000 for finished work.

While freelancers feel the most acute payment delays, salaried employees are no strangers to payroll delays, either — even those who receive their paychecks via a regular biweekly schedule often report financial difficulties when waiting for their next pay period. This month’s PYMNTS Intelligence examines how corporates can improve their employees’ and freelancers’ financial well-being via instant payroll solutions.

Workers are becoming more receptive to instant payroll, especially younger generations.

While earned wage access is still largely unfamiliar to the workforce as a whole, younger generations, millennials and Generation Z, are beginning to demand it in growing numbers, especially as these cohorts are the most likely to work in the gig economy.

A recent study found that 83% of employees between the ages of 18 and 44 said they should have access to their wages at the end of each workday or shift, and 80% said these funds should go directly into their bank accounts. Another 78% said that no-cost earned wage access would boost their loyalty to their employer.

Workers are even receptive to changing jobs entirely if it means access to instant payroll, with 81% saying it would be the deciding factor when accepting a position. Workers are much less receptive to earned wage access (EWA) if they have to pay an additional charge, with support dropping to just 23% in this case.

Workplaces are beginning to offer instant payroll in a limited capacity.

A recent study found that 7 out of 10 middle-market companies are offering EWA to some employees, and another 24% are planning to implement it in the near future. Just 5% of companies surveyed had no plans whatsoever.

These systems typically rely on instant payment schemes such as the RTP® network to deliver payroll daily, rather than waiting days for legacy automated clearing house (ACH) systems to move money into employee accounts. The number of companies offering instant payroll could increase as the use of the RTP network grows for other instant payment functions, and corporates become more adept in its capabilities.