The high cost of living is having a significant impact on many Australians. A recent Finder survey found three in five Australians – or 59% – are experiencing financial stress, while recent CommBank research found that one in three say they couldn’t come up with A$500 in an emergency.

Finance-related stress also has a negative impact on mental health and performance at work, where the effects are seen through increased absenteeism, reduced productivity and high staff turnover rates.

While credit card and buy now, pay later offerings have been shown to add financial stress by simply delaying the problem, on-demand pay – also known as earned wage access (EWA) – is changing the landscape for both employers and employees.

What is earned wage access?

EWA is a solution which enables companies to provide their employees on-demand access to a portion of their after-tax wages before payday. EWA is not an advance, nor a form of credit. It represents the earnings an employee has accrued, each day, available for early access should they choose.

While the concept has been around in the US and other countries for almost a decade, currently the only platform offering it in Australia is Paytime, which launched here two and a half years ago.

“Paytime connects seamlessly to payroll, and time and attendance software, so there’s no need for employees to wait for their weekly, fortnightly or monthly pay cycle if they need to access to their money,” explains Paytime director Steven Furman.

Paytime also offers in-app financial wellness tools, designed to empower workers with the knowledge and resources needed to take control of their financial lives.

Costs savings to companies

Furman says as well as enabling employees to plan ahead, the platform also benefits companies and CFOs by cutting the cost of employee turnover and absenteeism.

“The cost of living crisis has seen a greater uptake, with Paytime enabling middle-to-high income earners to access their money to pay down higher mortgages, vehicle servicing or other inflated household costs,” Furman says.

“By offering EWA to their staff, the company benefits because people aren’t looking for a higher paying job as they can access their money, instead of overdrawing or taking out a payday loan.

“Our client staff turnover rates have dropped 19–39%, which is huge when considering it costs a business 32.5–100% of annual pay to find, replace and train up a replacement,” adds Furman.

EWA pricing options

Paytime offers two pricing options:

1. A company pays a small, fixed, tax-deductible fee per employee, per month to get access to the platform, then employees pay a small ATM-like fee each time they access their money

2. A full employee benefit option is also available, where the company contributes a couple of dollars per employee each month, which entitles each employee to two free withdrawals each month.

When recruiting staff, advertising EWA as an employee benefit is seen as a stand-out competitive advantage.

“Stats show that companies offering EWA are filling jobs about 27% faster than competitors,” says Furman, “and it doesn’t affect the working capital of the business. When a staff member needs to access their pay, we provide the money to the employee, not the company, at no cost. Then on payday, the company reimburses us.”

The demand for EWA is poised for growth, with nearly 80% of Fortune 500 companies already offering it to staff. Partnering with Paytime means companies support the financial wellbeing of their employees and position themselves for long-term success in a competitive landscape.

Want to offer earned wage access at your firm?

Paytime offers a special discount to CA ANZ members. Visit paytime.com.au to find out more.