Evaluating On-Demand Pay Providers in the New Normal
Evaluating On-Demand Pay Providers in the New Normal
In this webinar you will learn how to…
- Help your company and employees reduce cost, improve productivity and adapt to the “new normal” with an on-demand pay program
- Make rehiring your workforce easier with a first-day, instant access to pay benefit
- Consider regulatory and compliance concerns to evaluate on-demand pay providers to ensure you’re selecting the right solution for your company
- Make it easier to retain employees by giving them control over their pay with a first-of-its-kind pay experience
COVID-19 has fundamentally altered every aspect of our lives. No matter what challenges every industry is facing, we all share one common opportunity: the chance to get things right this time. We have been given a unique chance to do things differently and re-evaluate what’s important. One powerful way to do that is through pay. By enhancing your employees’ pay experience with an on-demand pay benefit, you can actually increase your success with rehiring and retaining employees, while creating greater efficiencies and cost-savings for your business.
Director of Product Marketing
Product Marketing Manager
Duration: 30 minutes
Good afternoon again, everyone. I’m Natalie from DailyPay’s Event Team, and I’d like to welcome you to today’s webinar on Evaluating On-Demand Providers In The New Normal. Before we get started, I’d like to go over a few items so you know how to participate in today’s event. You will have the opportunity to submit text questions to today’s presenter, by typing your questions into the questions pane of the control panel. You may send in your questions at any time during the presentation. We will collect these and address them during the Q&A session at the end of today’s presentation. We encourage any and all questions as this is why we have the experts on the line for you guys today. So I would now like to introduce Josh Jackson, DailyPay’s Director of Product Marketing and Caroline Kirk, DailyPay’s Product Marketing Manager. Caroline, take it away.
Great. Thanks, Natalie. And thank you so much to everybody for joining us today. We are thrilled to have you and look forward to evaluating on-demand pay providers in the new normal. Today, we’ll be covering sectors where we’re seeing increased hiring, how digitizing your payroll technology can save your company time and money, evaluating pay experience providers, and taking a look at how a pay experience strengthens the bond between employees and their employer. Josh, would you like to get us started?
Yep. Thanks, Caroline. And welcome to everyone in the audience. One of the great things about DailyPay’s platform is that we work with just about any labor intensive industry you can think of. And from our interactions with our users, we can gain insights into our partner’s businesses. One example of how we’ve done this through the COVID-19 pandemic is through our Rehire America Index. DailyPay released our Rehire America Index in late May to track data across various industries. Moving onto the next slide here, I’ll be starting with some insights on what we’ve seen across four of the sectors that we’ve been getting a lot of interest in. There are a whole host of sectors we can track on DailyPay.com and you can check out that index in full detail on DailyPay.com. You can see the link at the bottom of the slide here.
DailyPay really has looked at four sectors in detail here that I’ll be sharing. And the first is hospitality. So hospitality was hit fairly hard in April, but as you can see here, it bounced back ever so slightly in May. So it’s now standing at a little over 80% of the staffing level that hospitality and hotels were at in the beginning of March. And if you look at the right-hand side here, it’s juxtaposed with a much more stable industry, which is healthcare. So healthcare staffing levels were within a three to 4% variance band each week every, single week of the year until the later half of May and into June where we’ve seen 5% or higher growth week-over-week in many weeks. So, overall head count in this sector is actually more than 20% higher than it was in March, which I think is not a big surprise given the need for healthcare workers to ramp up in this current environment.
The next sector we looked at restaurants, took a more negative turn of the outset of the crisis. And for example, the quick serve restaurant staffing levels, as you can see here, dipped by 24% from March to May. We have though, however, seen a rebound in this sector showing that there’s a rehiring push underway, though the sector hasn’t yet recovered to pre-crisis staffing levels. And then lastly, supermarkets and grocery are one of the areas where we’ve seen the greatest amount of hiring since the COVID-19 crisis began. Grocers have been slowly ramping up hiring over the past several months. And the increase accelerated greatly in May. At the end of April supermarkets had grown their workforce by 5% as compared to the beginning of the year. And at the end of May, the workforce in this sector was a staggering 28% higher than it was in January.
So you’re seeing a large ramping up in staffing levels here. One of our largest partners, Kroger, has hired over 100,000 workers since March. And our index is certainly capturing that immense hiring growth here. So we’d love to hear more from you about how the rehiring picture looks in your business. So feel free to add your company’s industry and any info on the hiring picture for your business in the chat, in your webinar window. We’d love to hear anything else you have. But I’m going to turn it back to Caroline, who will kind of walk through digitizing your payroll technology.
Thanks, Josh. That’s some really great data. So moving on to our next section here, digitizing your payroll technology. This is a trend that we’ve seen carry across all industries. As we all know, the coronavirus pandemic has fundamentally changed or impacted pretty much every aspect of our lives, whether it’s social distancing, wearing masks, or near constant sanitizing, this has really affected all of us at the individual level. But it’s of course affected organizations, businesses, and entire industries, as we just saw with the Rehire America Index. But one thing that all industries have had in common is the need to adapt. So one way to do that is through digitization. Take hospitals or doctors, for instance, a lot of big hospitals may have had telehealth services prior to the pandemic, but now they’re pushing it out front and center, they’re marketing it, it’s up on their websites.
It’s a really big deal. To put that into context prior to this, about 11,000 people were using telehealth services a week prior to the pandemic. And now we’ve seen that about 650,000 people per week are using telehealth services in the US, that’s according to CNBC. In fact, it’s projected that telemedicine visits could reach a billion by the end of 2020. And of course, hospitals and doctor’s offices aren’t the only industries to see rapid digitization as a result of the COVID-19 pandemic. Zoom stock has gone up more than 150% in 2020. And according to Adobe, COVID-19 accelerated eCommerce growth about four to six years with total online spending in May hitting $82.5 billion, up 77% year-over-year. So this is a really big deal. So some key elements to look for in a digital solution is robust technical infrastructure. You really want high quality, high speed tech and infrastructure systems.
That’s really essential to going digital. You’re going to want something that’s scalable. And now this point is probably more applicable to larger companies or organizations, but you’re really going to want to make sure that your digital solution can scale to meet the needs of your organization. If you’re digitizing your payroll technology with an on-demand pay or a pay experience provider, which pay experience is basically giving your employees the ability to interact with their pay before payday. You’re definitely going to want to make sure that that provider can meet your organization’s needs, including supporting your employees. What’s going to happen with telehealth, for example, if the telehealth provider doesn’t have their support system worked out? Well, the hospital or doctor is going to be fielding a lot of support calls. And it’s the exact same thing with payroll. Next, you’re going to want an end-to-end digital process or paperless.
Now, more than ever, we are going cashless. It’s been a convenience thing for a while, but now with COVID, it’s really become a safety issue. Businesses and employees don’t want to risk handling money. In March, Reuters reported that South Korea’s Central Banks, that it was taking all bank notes out of circulation for two weeks and even burning some to reduce the spread of the virus. And also in March, the Louvre Museum in Paris banned cash amid the outbreak. And it’s saying now that its decision to accept only credit card payments as part of an effort to make staffers feel more comfortable about returning to work, according to the Associated Press.
So, that’s kind of the phase that we’re in right now is a lot of Americans are looking to return to work. You’re going to want to make sure that your employees feel comfortable. Payroll technology vendors are a great solution to getting your employees paid without having to necessarily handle cash or paper checks. So, that’s definitely something to look into. And you’re lastly going to want to make sure that it’s private and secure. You’re really going to want to make sure that your employees are taken care of. So that’s something to evaluate as well.
And in the next slide here, we’re going to take a closer look at some benefits. So as I’ve mentioned before, we’re seeing a wide variety of industries adapt to the coronavirus pandemic and embrace digital solutions. And one way that you can digitize your payroll tool kit is by implementing an on-demand pay experience. Again, a pay experience gives employees full control over their pay, which carries a lot of benefits for employers and employees. On the employee side, one major benefit is having instant access to funds 24/7, 365. Especially during a crisis or times of urgency, having that control to access your pay anytime is critical. I remember back when all this started going to the grocery store a few times and quickly seeing items fly off the shelves. It seemed like overnight hand sanitizer was nonexistent. And for someone living paycheck-to-paycheck, having the opportunity to access their pay and acquire those key supplies is paramount.
Of course, you’re not going to want to be affording, but having that peace of mind that comes with knowing that you can get a couple bottles of hand sanitizer, or you can buy a pack or two of face masks, that’s going to be a game changer. So, that brings us to our next point. You might be wondering how can DailyPay calculate an employee’s available balance and make all this possible. Employees might have garnishments, or benefits, and arrears to take into consideration. And of course you don’t want to over advance funds. So at DailyPay, we solve this by creating a personal profile for each employee, which informs what we call the available balance or net to gross pay ratio.
DailyPay is unique in that we’re the only vendor that creates this personalized profile for each employee. The available balance is dynamic, meaning that the pay profile of an employee changes over time and the advance rate will change to accurately reflect the net pay owed to that employee. So this allows the user to enjoy continuous, full access to the product. And this also allows DailyPay to let employees access up to 100% of their earned, but unpaid pay, because this smart algorithm is able to account for these adjustments over time.
Lastly, control to help themselves, friends and family financially. Even before COVID, we’ve always helped the individual employee have control over their finances and develop healthy financial habits. But in the midst of this pandemic, what we’re seeing more of is that users are accessing their pay to also help friends, family, or loved ones. We’ve seen users help roommates who maybe got laid off with groceries or rent, and more users are making transfers to make sure that their families get by. So, really powerful stuff. And I think Josh can walk us through a couple of benefits on the employer side.
Yeah. Thanks, Caroline. So when the employee’s experience with pay improves, there are measurable benefits to any employer who partners with us. We’ve seen on DailyPay’s side, increased retention with turnover rates at our partner organizations improving by over 40%. So a 40% reduction or higher for DailyPay users as opposed to the non-DailyPay using population. So it’s a significant benefit to the employer. We’ve also seen increased employee engagement with 11% productivity gains among the workforce. And I think we already alluded to this, but no change to the payroll team’s workflow, which we’ll get into in a little bit more detail in the following slides. But I noticed there’s a few QSR and restaurant clients in the audience. This last point here, a paperless digital solution has become even more relevant we’ve found in that space, as we’ve seen a lot of partners reaching out about how can we do… We used to do tips disbursement with cash, for example, how can we do that in a digital way?
Luckily, there’s a way for DailyPay to do that in our platform. So we’ve helped some of our partners think about how do you get tips out to employees on a daily basis without having to have them handle cash. We’re seeing severe shortages, for example, in the cash registers of a lot of delivery services and quick serve restaurants. So, that’s one area where we’ve seen that. And we also have tools to help streamline the 100% electronic processing of off cycle payments. So we’ve added a new product capability just about a week or two ago called Cycle, which makes processing these off-cycle payments easier than ever before. So, it’s another way that an on-demand pay platform, and particularly DailyPay, can really help out if your payroll team needs to streamline those processes. Caroline, I think you wanted to get into evaluating different on-demand pay solutions. So I’ll turn it back to you.
Great. Thanks, Josh. Now that we’ve kind of covered the current landscape and introduce some benefits of a pay experience, we’re going to move into what you should take a look at and evaluate when you’re assessing various solutions. So here are a couple. You’ll see the first one is instant access. Can your employees access funds instantly? Now, this is of course critical any time, but especially so during periods of uncertainty or a crisis. Like I mentioned earlier, this pandemic has really demanded that each of us move quickly and that includes preparing and adapting. And knowing that you can access your pay immediately to do just, that is a huge key here. Now, it’s also important to define what instant truly means. Sometimes vendors will describe payments as instant, but actually they’re just the same day ACH. But with DailyPay, a user can literally sign up, get started and access funds in seconds. It’s truly instant.
And the last point to consider here is where these instant funds can get delivered. With DailyPay, we understand that flexibility is really important. So a user can send instant funds to any destination account. Sometimes vendors will only allow users to get funds instantly at a retailer’s cash pickup point. But not only is that not quite instant, but especially during a pandemic or as we’re getting back to the new normal, going to do a cash pickup could be another risk. The next item here is simple fees. Is the program pricing structure simple and transparent? That’s crucial to ensuring a good employee experience. Next, we have universal access. Is the program available in multiple languages? Can employees access the program on any device? DailyPay is available in English and Spanish and works on all browsers, including older and current versions of Internet Explorer, Google Chrome, Safari, and Firefox.
We understand that it’s super important for users to still be able to access this service on older versions of these programs. And according to the Pew Research Center, roughly three in 10 adults with household incomes below $30,000 a year don’t own a smartphone. And that stats from 2019. So, that just goes to show that it’s really important to make sure that your program is accessible. The next point here is live support. Can your employees call the vendor for help? Can they get their help online? If not, this is likely to lead to a lot of calls for your payroll and HR teams.
Next, financial wellness tools. Does the vendor offer free savings and budgeting tools to help your employees achieve financial stability? And lastly, personal experience. Does the program account for each user’s personal financial situation? This is sort of the point that we were talking about earlier about the dynamic income algorithm. But it really is critical to ensuring that any employee is able to participate in the program. Back over to you, Josh, for some compliance considerations.
Thanks, Caroline. So from the employer’s perspective, I mentioned earlier, it’s usually the preference of the employer that they not be the ones funding any amounts that are sent to the employee before payday, because that essentially equates to running your payroll operations on a daily basis. Doing tax withholding, doing all of the necessary deductions, et cetera. So assuming that you’re going to move forward with an on-demand pay solution and that the third-party is going to be the one funding the payments, there are two main methods to pay back the vendor. The first is what we like to call the traditional full net pay method, where 100% of the net pay owed to the employee is sent to the employee’s direct deposit instructions on file.
In this method, the vendor’s technology takes care of all of the necessary reconciliation work and the payroll team simply needs to make its ordinary payroll deposits on its ordinary schedule. We call this the traditional method, since it predates on-demand pay products. From paper checks to direct deposit, employers have always been calculating and remitting 100% of the employee’s net pay and sending it to their employees. Another analogy is how your payroll team loads 100% of the pay, the net pay that’s owed to an employee onto a pay card, for example. And those have certainly become popular in the most recent decades.
The second method depends upon splitting the paycheck between your payroll team and a third-party vendor. In this method, the primary means of repayment is processing a wage deduction. And then in states where wage deductions are impermissible, and there are a whole handful of them, the company will rely upon the third-party vendor to debit employee bank accounts in order to be repaid in those states. In this second method, in order to satisfy the wage and hour requirements that 100% of the net pay that was owed to the employee was paid out. You will be relying upon the third-party vendor to act as an extension of your own payroll operations.
So you will be more involved in the repayment process for that vendor as well, since you will be required to process wage deductions and remit funds separately to the vendor for those amounts. DailyPay works under the first method. On the left hand side here, the prepaid model. Where 100% of the net pay is sent by the payroll team on payday, according to the employee’s direct deposit instruction. This keeps you out of the process of reconciling with the vendor, keeps the vendor out of the process of ensuring wage and hour compliance, which is really the responsibility of the payroll team, and allows you to avoid making any major changes to your current payroll process.
Caroline, I think that covers off the compliance side. I think you have some thoughts on program success.
Great. Yes. Thanks, Josh. Now, we’re going to take a closer look at how the vendor works to maximize your program success. The first thing you’re going to want to look at here is, is the program highly adoptable? If you’re going to be taking the time to evaluate on-demand pay providers and roll out this program, you’re really going to want to make sure that it’s something your employees will actually use. Of course, the more employees use the program, the higher the ROI, and the better it is for your employees. DailyPay is highly adoptable. Our partners typically reach 30% adoption in the first 13 weeks. So you’re really going to want to look at those numbers before moving forward with somebody. Next, you’re going to want to check how involved the vendor is going to be in rolling out and managing the program. You have to ask yourself, how involved do you want to be in this?
You’re going to have to see, do your payroll and HR teams have the capacity for additional work? If not, you’re definitely going to want to partner with a vendor who handles the heavy lifting for you. And at DailyPay, we do just that, with our total excellence offering. So total excellence is a full 360 launch strategy that we tailor to fit your company’s needs. Oftentimes, it’s a combination of online and offline communication strategies. Our studio team and creative talent can custom design and white label your program based on your brand guidelines.
A couple things in scope, for example, are custom posters, custom swag, email communication, all that good stuff. And lastly, you’re going to want to look at the vendor’s experience and logo retention. Has the vendor partnered with companies similar to yours? Is the vendor experienced enough to scale to meet your needs? DailyPay has worked with hundreds of companies across varying industries and we’ve worked with partners of all sizes. In fact, we partner with the most Fortune 100 companies out of any on-demand pay provider. And that’s afforded us with really rich experience.
Thanks, Caroline. So we’re going to walk through in the last section here before questions, the benefits to your organization of having a pay experience. So I said before that employee pay is a compact and it’s really about a two-way street between employer and employee. And I wanted to talk a little bit more here about how we think about that compact and the role that we play here at DailyPay. There’s an open discussion about what the right role for an on-demand pay provider is along the value chain of HCM providers. Some may feel that it’s about creating new ecosystems of users along the same demographic spectrum. Others may want to build a marketplace to offer low cost products and services to employees through partnerships with online retailers or interactions and integrations with other mobile apps.
At DailyPay, we view our role as supporting our partners, the employers who are trying to develop a strong support system within their own workforce and really support their workforce through this benefit. And that’s why our platform was designed not to encourage spending with one retailer or another, or push employees towards using a particular banking relationship or another, but rather to enhance the pay experience for those employees. To enable employees to pay or save, and to help you reward employees or cycle out your payments mid pay period. It’s for this reason that DailyPay’s PayX platform has some of the highest adoption rates in the on-demand pay space. And also generates improvements across the board for your partner companies, such as those that you can see here on the screen. Caroline, I think you had a few more things to say along these lines before we turn to Q&A.
Yeah. So just to kind of wrap up here, we just wanted to end it on this quote, which we felt was really powerful and really showcases how DailyPay has really evolved from something that just helps the individual employee to really going above and beyond and having an impact on employees, families, and friends. So we thought this quote summed it up really nicely. Here, we have a single mother with two children, and she uses DailyPay when she needed to buy groceries. It helps her to feel relieved knowing that she can have her hands on money when she needs it, instead of stressing to make ends meet. And during this unprecedented crisis, anything that you can do to help your employees alleviate that stress and get control over their finances is really powerful. So we just wanted to end it on that note before turning it over to Q&A.
Yeah, yeah. And Caroline, I see a few questions coming in. Maybe we could get started with this one. What are, Caroline, the typical fees for the employer and the employee of an on-demand pay platform?
That’s a great question. So, it varies. But with DailyPay, it comes at no cost to the employer. And employees using the platform, just pay a flat fee whenever they initiate an on-demand pay transfer. So for next day ACH transfers, the fee is 1.99 and an instant transfer is 2.99. We intentionally developed this super simple pricing structure to be very intuitive. It’s just like an ATM. And this helps to ensure that users have a transparent and positive experience. And our savings and budgeting tools are also totally free.
Yeah. I was going to say, I have a question here from Aaron.
Which is, what systems and implementation work needs to be done in order to set up an on-demand pay program? So, first point I wanted to make was that DailyPay works with any payroll, and time and attendance system. So we are compatible with any of them. There are a few simple flat file exchanges that need to take place. So we’ll receive a raw time feed of employee reported hours, not employer approved hours, but employee reported hours from your time and attendance system. And then we’ll combine that with some information, as Caroline was mentioning earlier, in the payroll system to create a pay profile for each employee. So, that will help us to make an available balance. And then employees will be paid based on the information we’re receiving from those systems. So, that is basically how that works. And I see that we’re running right up on time. So I’m going to turn it back to… We will answer any other questions we’ve received in followup and I’ll turn it right back to Natalie to wrap things up.
Thank you for all those wonderful insights, Josh and Caroline.
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