Fintech company FinFit is making free early wage access available to its 145,000 employer clients to further its mission of making financial wellness mainstream.
“We’ve worked out a system whereby we are able to provide this service to the employers we service today so that the employees will have no cost to have access to their wages at any time,” says David Kilby, founder and president of FinFit, a Virginia Beach, Virginia-based financial wellness provider. “We work with employers with the promise that we will get their employees to be more productive by reducing the financial stressors in their everyday lives.”
Early wage access providers typically charge employees a subscription fee, a flat rate per transaction or a percentage of the funds requested. Through their employers, FinFit employee clients will be able to access their earned money through WageNow, one of the services included in employer’s financial wellness tools and resources.
“If we’re truly a financial wellness platform, allowing employees to access their wages, but charging them to do so would in its essence reduce the amount of compensation that employee has earned,” Kilby says. “Employees should be able to time their cash flows.”
FinFit isn’t isn’t alone in offering employees early access to pay.
Though employers have embraced the value of investing in employees’ financial wellness, the number of employers offering payroll advances has decreased to 15% in 2019 from 17% in 2018, according to the Society for Human Resource Management.
Employers have been turning to advanced pay tools as a way to help those employees who may be financially unstable. Early access to their pay can help those employees who struggle between paychecks. A majority of U.S. workers do not have sufficient savings to help them in the event of an emergency. Almost 20% of Americans don’t save any of their annual income, while another 21% only save 5% or less, according to Bankrate.
“Our goal is creating major behavior changes within the employee themself, which means that we can generate a return to the employer,” Kilby says.
But an early wage access benefit doesn’t help without the proper education to go with it, Kilby says. Having early access to wages can be dangerous if employees aren’t making good choices when it comes to spending and saving, or are relying too heavily on the benefit.
Early wage access “doesn’t replace the need for savings or financial planning,” Kilby says. “Employees need to use this program in a responsible way. As an employer your responsibility is to evaluate and observe the activity and ensure that this program is being utilized truly for cash flow needs — and not for financial emergencies.”
