What is Earned Wage Access and why does your business need it?

If the pandemic has taught us anything, it has brought into perspective how important employee wellness is and the overall effects it can have on your business. It has been an incredibly tough two years and the repercussions are going to be felt in the economy, businesses, and individuals for years to come.

The cost of living continues to rise in South Africa. This, accompanied by multiple knocks to the economy coupled with low incomes and the lowest unemployment rate in the world, many employees are struggling to make ends meet. Stats SA data indicates we save 0.70 percent of our income. Add to this household debt of around 77.1% of income in 2020, and a bleak picture starts to emerge.

With no access to formal, secured credit, some fifty percent of workers take out an unsecured loan between their paydays. Only 1 out of 10 have cash left after paying bills. People often turn to informal lenders (mashionisas) who charge an average of 27% interest. Continued over several months, workers often find themselves in a debt spiral they cannot escape.

We urge businesses to take a closer look at what they can do to help their employees regain control of their finances, especially now during these trying times. One of the ways employers can help alleviate financial burdens experienced by their employees is to look at an Earned Wage Access (EWA) solution.

What is Earned Wage Access (EWA)?

Earned Wage Access enables employees to access their hard earned wages before the scheduled payday. This is not a loan and not as scary as it sounds. It costs your business nothing and you have full control of how much you are willing to allow your employees to access. Earned wage access enables employees to access their wages without the threat of a costly loan and with the added benefit of building savings and getting out of the risky financial cycle altogether.

Paymenow – the EWA solution for your business

Paymenow was the first EWA solution in South Africa and we were founded to provide an alternative solution to exorbitant payday loans that not only alleviate the debt burden but also encourage responsible financial habits and instil a savings mindset in our users. We do this through our unique value-added service of financial education and gamification.

We give your employees real-time access to already-earned wages, via our website or mobile app. The solution integrates into employer payroll systems and allows employees to cash out a percentage of their earnings (set by you, the employer), which is then deducted from the salary they are paid at the end of the earning period. As previously mentioned, our EWA solution is free to employers, and because we facilitate payments, it doesn’t affect your cash flow.

Our world-class tech platform has the highest levels of security and has undergone information security and cyber risk assessment from F-Secure which guarantees bank-grade security. We offer 24/7 online support at no extra charge and employee training is supplied. We are also proudly the only Earned Wage Access organisation in SA to be associated with and sponsored by an international NGO, the Catalyst Fund, mandated to financial inclusion.

Furthermore, user research conducted into Paymenow’s users by NGO The Catalyst Fund in 2020, found that:

  • Many employees are supporting family back home (up to 40 people, in one instance);
  • They frequently run out of money towards month end for basic expenses like transport needed to get to work;
  • Paymenow helps them avoid turning to friends or family for loans or in dire situations, loan sharks.

An Impact Performance Report, conducted by 60_decibels for Paymenow early in 2021, was compiled based on interviews from a sample set of more than 3 000 employees who use Paymenow’s responsible EWA fintech platform. The report found that:

  • 81% of Paymenow users reported quality of life improvements thanks to the app
  • 67% reported they experienced less stress
  • 40% of the respondents said they were better able to handle emergencies
  • 34% said that Paymenow meant that they didn’t have to rely on their families for support
  • 27% mentioned being able to afford to pay household bills
  • 24% earn less than $6/R85 a day, compared to 60% of South Africans in general
  • 48% percent earn $11/R155 a day, compared to 78% of the general populace
  • The average Paymenow customer is supporting five people
  • 97 percent of respondents do not have a viable alternative to Paymenow

This illustrates how dire the situation is for many employees, especially the underserved market, and how having an alternative solution such as Paymenow to access funds responsibly, can help turn it all around for them.

Innovating Earned Wage Access through Financial Education

Not only do we believe in disrupting the payday debt cycle, but we also believe that financial education is crucial to correcting the indebtedness of employees. Our platform has integrated financial education modules incorporated focused on providing your employees with a roadmap to financial wellness with top tips and tricks to help them save and change their relationship with money.

Paymenow takes your employees’ best interests to heart by encouraging in-app financial education through gamification. By taking your employees’ on a financial wellness and inclusion journey through financial education modules, they can earn points and advance through tiers to achieve greater access to already earned wages at discounted fees.

Why does your business need EWA?

Having Earned Wage Access integrated into your business offers the perfect opportunity to bring financial wellness and education into your workplace. The truth of the matter is, life happens. By taking care of your employees well-being improves your business’ bottom line – happy employees want your business to succeed and will take a keen interest in your business goals.

Financial wellness is good for business and even better for your people.

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