How Subscription Services are Quietly Destroying Financial Wellness

Recently, I checked my credit card bill and found that I had been paying a $19 a month subscription to DuoLingo for Spanish lessons. I flashed back to a moment 2 years ago where I thought I should really learn more fluent Spanish. I had completely forgotten I subscribed and realized I had just paid close to $500 for something I never used.  It was at that point that I went on a subscription service witch hunt. 

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Employees Beware: The Dangers of Allowing Debiting

Many who want access to their pay before payday are told by providers that they need to allow access to the bank account where their payroll direct deposits are made.

It may seem innocuous, and it is a legal and somewhat normal way of doing business nowadays, but there are pitfalls, and such a requirement should not be necessary to access your pay before payday.

We are sharing our financial information all the time. Often we don’t understand just how much access into our personal finances we are allowing entities to have. On-demand pay providers that require the debiting of bank accounts to take back the money provided before payday can create problems for their clients on two main levels.

First, “people don’t realize they may be enabling some third parties to view ALL their financial data when they agree to authorize them, say, as a requirement to get an advance in pay,” according to DailyPay Vice President of Payments, Gary Pearcy. (Note: DailyPay does not require such authorization for employees to begin receiving pay in advance of payday.)

Speaking during the Dec. 11 The Source by DailyPay podcast, Pearcy said not only can these unregulated entities “see everything that person has in that online banking world, but they have the ability to move money, which is really dangerous.”

Unregulated? Banks themselves are not a problem here because they are “heavily regulated,” and part of their job is to “protect their customers’ information,” Pearcy said.

The problem is many people are allowing broad account access to nonregulated entities. “This is common,” he said, and while most of these entities are prudent in their access there is no formal oversight into their behavior. “This is frightening,” he said.

But that’s not all. There is another way that those with access to user bank accounts can “harm their customer,” Pearcy said.

Complaints have been reported regarding the premature debiting of bank accounts to recover on-demand pay amounts before payday occurs. This can put an account holder into a negative balance which then “certainly results in overdraft fees,” Pearcy said. These businesses “may not have their customers financial well-being at heart.”

It is “not our practice at DailyPay to debit accounts,” Pearcy said. The employee clients of DailyPay simply redirect their direct deposit so that on payday, DailyPay can receive it, remove any amounts paid prior to payday plus an ATM-like fee, and instantly send the remainder to the employee’s bank account of choice.

DailyPay’s on-demand pay process does not demand employees authorize bank account access, which should not be necessary in order for employees to get access to earned pay before payday.

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Enabling Financial Wellness and Killing Off the Payday Loan Industry

If you’ve ever had to live paycheck-to-paycheck, where you’ve been challenged to manage all of your financial obligations between pay dates, and every dollar you earn is designated for payment of some bill (many of which are already overdue), you know how stressful this can be. And it can be even harder to dig out, especially if you take a payday loan.

When an employee has instant access to earned pay (money they have already earned) through a daily pay benefit solution, it helps to relieve this type of financial stress. Workers can access money as bills become due to meet their financial obligations and manage unexpected expenses, without having to add the additional stress of overdraft fees, late charges or payday loan fees and interest. Additionally, the transparency employees have into their accrued earnings allows them to make more informed decisions when it comes to earnings and their spending. For example, an employee may want to pick up an additional shift to meet their financial obligations and lifestyle choices, like having to buy a birthday gift for a family member.

According to Forbes, 78% of all American workers live this scenario every day and the toll that this takes on their mental health and productivity in the workplace is palpable. DailyPay recently conducted a survey of our client’s employee users to find out how access to DailyPay helps them, and what expenses they typically pay using their transferred earnings. Here are the results of that survey:

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Press Release: Daily Payments: A Favorite Benefit Among Contact Center Workers & Employers

Daily Payments: A Favorite Benefit Among Contact Center Workers & Employees

Nearly 40% of Employees at Five Nationwide Call Centers Access Their Pay Early With New Company Benefit

 

 

NEW YORK (February 5, 2018) – DailyPay, a financial solutions company that reduces employee turnover through instant access to earned income, has experienced an especially passionate adoption rate among the five nationwide contact centers who have started offering DailyPay as an employee benefit. These DailyPay partners—Staff Line, Silverback Network, CaLLogix, and DialAmerica—have seen, on average, 38% adoption among their employees.  Continue reading “Press Release: Daily Payments: A Favorite Benefit Among Contact Center Workers & Employers”