New payday options to make ends meet

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Mr Dombroski’s company, FlexWage, of Mountainside, NJ, also gives employees a portion of their earned but unpaid wages, but unlike PayActiv, it does not use its own money to fund transactions – it makes money. money directly from employers’ coffers. It’s the most financially viable approach, he says, but it appeals only to the most motivated employers.

“I would be lying if I didn’t say it’s been a struggle, but we kind of knew it,” he said.

He thinks the tide is starting to turn. A new partnership with ADP, a leading payroll service provider, has helped FlexWage gain recognition among larger companies. The company says it is finalizing deals with two employers that would double the 8,000 people who currently use its system.

“There has been so much attention to the high cost of short-term loans, like bank overdraft fees and payday loans, that employers now understand the urgent need much more clearly,” said Dombroski. “We no longer have to convince them that there is a problem. Now we have to convince them that there is a solution.

Some companies that facilitate faster access to wages eliminate the employer and go directly to the workers. Two years ago, Activehours in Palo Alto, Calif., Began offering an app that allows hourly workers to take photos of their timesheets and cash their upcoming wages in advance. On payday, Activehours withdraws the money from the worker’s checking account. People from around 10,000 companies have tried it, including employees at Apple, Starbucks, Whole Foods, Best Buy and Home Depot, according to the company.

Like almost all quick borrowing options, the services have fees that can be higher than alternatives like credit cards. Activehours has a hippie “pay what you think is worth” fee structure, but FlexWage and PayActiv charge rates that typically cost between $ 3 and $ 5 per transaction. A worker who pays $ 3 to withdraw $ 100 per week before payday is effectively paying an annual percentage rate of 156 percent for the money.

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