About six years ago I had a revelation — why should hard-working Americans wait weeks until a designated payday to access the money they had already earned?
In 2020 we all could agree that life happens between paydays. Everything from an unexpected medical bill to rent to the need to purchase essential supplies might arise in that timeframe. Arbitrary decisions as to when to pay is simply not fair to millions of hard working Americans. Sadly, many will resort to potentially financially-crippling options such as payday loans to address the gaps caused by that system’s failure.
So I took an in-depth look at this entire landscape of how people were paid in this country. I saw an opportunity for change — and DailyPay was born.
When we built DailyPay, we made a few key decisions with the American worker in mind. We decided you need to integrate with employers, for multiple reasons. First, you need to interface with time and attendance, payroll and accounting data to determine verified net earned income. Secondly, you need to avoid discriminating against employees and offer them the same best-in-class services and price no matter who they are.
When we took a look at employee account debiting, we knew it was something we should be against. It’s too easy to misuse, and if we are a service that is aiming to enhance financial wellness, accidentally causing tons of overdraft fees is anathema to the mission. Integrating directly with the payroll system, another thing only employer-integrated providers can do, avoids this key consumer harm.
In regards to pricing, we determined early on the fees should be low, simple and no funny business. “Voluntary tips,” “membership fees” or other gimmicks where large groups of people end up accidentally paying for something they didn’t want or intend is not fair. And since it costs money each time to move money through the financial system, on-demand pay is most akin to a payments business, so a nominal processing fee for each transaction was the smartest way to go.
Fast-forward to today. With states starting to look more seriously at this space, and with the Federal Government dipping its toe in the water, the emerging framework for how to evaluate on-demand pay is increasingly becoming a function of the hot-button areas we addressed early on. Just recently, the Consumer Financial Protection Bureau (CFPB) released an advisory opinion regarding certain types of On-Demand Pay providers.
While the CFPB’s advisory opinion does not apply to DailyPay, we appreciate the CFPB taking an important first step in laying out the parameters around what is and is not considered credit. DailyPay’s proprietary technology does not rely on employee payback of funds via a payroll deduction, debiting of bank accounts or otherwise.
DailyPay spent long hours weighing the implications of the questions above. Today, we feel validated that we made the right decision in each case, and it is gratifying to see a regulatory framework emerging around leadership we’ve been taking these intense past couple years.
As a result, millions of employees from America’s leading businesses can be assured that their employers have proactively taken steps to transform their business and give their staff choice and control over their pay by offering on-demand pay through DailyPay.