Dive Brief:
- Real-time access to employee compensation through mobile apps is sweeping across industries. Companies using "payday apps" include Uber Technologies, McDonald's Corp. and Outback Steakhouse, reports the Wall Street Journal. About 20% of employees choose to accept their money every day.
- The app, Instant Financial, alerts employees of the wages earned the day before. Users are then given the option to deposit up to half that amount onto a debit card. Instant Financial is of no cost to users, but it does charge the employer.
- The use of payday apps is an incentive for employees to not only stay with the company but work longer hours. However, without budgeting guidance, employees can spend almost half of their biweekly payment.
Dive Insight:
The instant-payment app has some downfalls, but for the most part employees are benefiting from immediate access to their funds. Individuals struggling financially that use payday apps no longer need to rely on short-term loans or cash advances that can accrue interest.
Traditionally, payroll systems are limited to paying employees on set dates. However, the installment of new software of payment tools requires companies to examine what time is the best to introduce new payroll solutions, perhaps at the end of a quarter, according to Sage Software. Not all of the employees working for the companies that are using Instant Financial, thus requiring them to simultaneously run their old payroll system.
Digital transformation is motivated by the flexible solutions employees demand, and employers are looking for new ways to incentivize their workforce by turning to mobile apps.
The implementation of mobile apps in the workplace shows no signs of slowing down. The app market is expected to reach about $6.3 trillion by 2021. It was only worth about $1.3 trillion in 2016.
Employees are growing increasingly reliant on apps and functions that are personalized and easily accessible. Yet more than one-quarter of companies still do not have a virtualized mobile app to offer employees.
