Debunking Myths About On-Demand Pay
Introduction
On-Demand Pay, also referred to as Earned Wage Access (EWA), is an innovative financial service allowing employees to access their earned wages before their scheduled payday. Despite its growing popularity, there are several myths surround Earned Wage Access. Let's debunk these myths and set the record straight.
Myth 1: Earned Wage Access is the Same as a Payday Loan
Reality: Earned Wage Access is not the same thing as payday loans, and was created as an antidote to payday loans. With Earned Wage Access employees access money they have already earned, not borrowed funds. This means there are no credit checks, interest or repayment terms involved. Payday loans, on the other hand, are short-term, high-interest loans that can lead to a cycle of debt.
Here at Level, we pride ourselves on empowering your employees to improve their financial wellbeing through On-Demand Pay. We do not offer your employees any debt products, nor cross-sell any other products to them, on our platform. To read more about the products we offer, check out this page.
Myth 2: Earned Wage Access is Costly for Employees
Reality: The cost of using Earned Wage Access services is typically minimal, especially compared to the high fees and interest rates associated with payday loans or credit card debt. It is a low-cost option for employees. And, importantly, staff only pay a small, flat fee like they would at an ATM-machine. That means no interest or any risk of spiralling.
Myth 3: Earned Wage Access is Complex and Time-Consuming to Implement
Reality: Implementing Earned Wage Access is often straightforward and hassle-free. Most Earned Wage Access providers handle the setup process and integrate seamlessly with an employer's existing payroll system. Read about Level’s existing integrations here. If you don’t see your payroll or HR system listed, Level’s dedicated team can work to integrate with your system as part of our onboarding procces. As such, employers can offer this benefit without significant changes to their payroll processes or additional administrative burdens.
Myth 4: Only Low-Income Workers Use Earned Wage Access
Reality: Earned Wage Access is used by employees across various income levels. Financial emergencies and unexpected expenses can affect anyone, regardless of income. On-Demand Pay provides a safety net for all employees, enabling them to manage their finances more effectively and reduce stress. Without hard credit checks, and a universal, flat withdrawal fee, On-Demand Pay is an inclusive employee benefit which can boost financial wellbeing no matter your income. The reason there are no credit checks? Because it’s not credit!
Myth 5: Earned Wage Access Encourages Poor Financial Management
Reality: Earned Wage Access can actually promote better financial management, and in turn financial wellbeing. By allowing employees to access their earnings when needed, EWA helps prevent the reliance on high-interest payday loans or credit card debt. Additionally, On-Demand Pay providers often offer financial wellness tools and resources to help employees budget and manage their money more effectively.
Learn more about On-Demand Pay, or Earned Wage Access, by checking out our videos, or watching the short demonstration of our product below:
Conclusion
Earned Wage Access is a powerful tool that can significantly benefit both employers and employees. By debunking these myths, we hope to provide a clearer understanding of Earned Wage Access and its potential to improve financial wellness and overall job satisfaction. If you're an employer considering Earned Wage Access or an employee interested in how it can help you, now is the time to explore this innovative solution.