Have you ever questioned why you don’t pay your workers more often?

If you’re like most businesses, you probably don’t offer employees on-demand pay. Instead, you probably process wages twice a month or biweekly, which is when 63% of American workers are paid, according to the Bureau of Labor Statistics.

Your reasons behind that pay cycle may be cash flow and liquidity shortages. After all, if you do not have the money on hand, you can’t pay your workers.

However many American businesses process payroll only twice a month for different reasons. Most businesses are held back by the time and resources required to transfer and reconcile those wages. 

This doesn’t mean you should accept those pay cycles as the norm.  After all, paying your employees more frequently could be a competitive advantage in a tight labor market. 

So eliminate extra hassle and consider a complementary solution to your regular payroll processing: on-demand pay.


What is on-demand pay?

On-demand pay gives workers access to their earned wages in real-time, rather than waiting for traditional payday. Workers have more control over their finances with options to receive their wages daily or weekly. Employers or third-party providers typically offer on-demand pay services through mobile apps or online platforms.

This way, you can maintain your normal pay cycle, but your workers have the flexibility to claim some of their wages early when they need to.


How does on-demand pay work?

On-demand pay can integrate with payroll to track hours worked and calculate real-time earnings. Workers register in the self-service portal, providing necessary details like their name, employee ID, and bank account information. Once approved, they can access earned wages and choose to transfer funds to their preferred bank account.

Some EWA services may charge transaction fees for this early access. However, on payday, any advances or on-demand payments made are deducted from the total wages. Overall, on-demand pay gives workers greater financial control by providing a convenient way to manage their cash flow between pay periods.


Here’s why on-demand wages are important

So why should you seek out an EWA solution and establish an on-demand wages program for your employees?

Read Use Case

Think about it this way: Having better control over your cash flow can help your business grow and operate more efficiently, your workers need flexible access to funds for their finances. An instant payout solution means less stress about money and improved productivity from workers.


Everyone has unexpected costs

Recent studies show that nearly 60% of consumers were living from one paycheck to another, while 20% were having difficulty covering their monthly expenses in 2023. Yet when you process those paychecks only once or twice a month, a single emergency can spiral an employee’s finances out of control. 

A visit to the hospital, a sudden car malfunction, a family emergency requiring a last-minute ticket on a cross-country flight—the possibilities are endless. Yet when your workers don’t have the money saved up to pay for those sudden expenses, they don’t have many options to turn to.

Without flexible access to their wages, your employees have few options, none of which are ideal:

  • Avoid paying and racking up credit cards, overdrafts, or late payment fees.
  • Take out predatory and high-interest payday loans.
  • Pick up another job.

And when your employees are forced into making bad financial choices to cover expenses, their well-being and mental health suffer.


3 benefits of on-demand pay in the workplace

As the employer, you can help your workers avoid falling into precarious financial situations by offering on-demand pay.

1. Financial safety nets improve productivity

According to a 2023 PwC survey, 45% of American workers with financial difficulties reported that they are distracted by these concerns while on the job.

With EWA, you can rest assured that your workers can fully dedicate themselves to their tasks without financial worries nagging in the back of their minds.

2.Attract and retain talent

By adding a more flexible payment option, like on-demand pay, your business will stand out to potential workers as a great place to work and make it easier to retain top talent. As an employer, this shows that you are willing to meet your workers where they are, establish a good rapport, and invest in tools that provide support. 

3.The “care” factor

By helping ease their financial strain, you can show your employees that you truly care about them.

EWA platforms are easy to use, don’t require approvals or back-and-forth communication, and help your workers claim an additional degree of control over their finances. 

As the company provides reliable access to instant withdrawals, you will be able to drum up a lot more loyalty and dedication from your workforce.


How to stay compliant with on-demand payment

As with any other payroll processing, on-demand payments have their compliance regulations, both federally and at a state level.

According to the Truth in Lending Act for Earned Wage Programs by the Consumer Financial Protection Bureau (CFPB), your compliance requirements will be different depending on how you choose to cover the cost of an on-demand pay service:

  • If your employees pay the transaction fees, then the federal government will consider those payments as a loan and you will have to comply with the Truth in Lending requirements.
  • If you are covering all the associated fees, then your on-demand pay offering is a “Covered EWA Program” and exempt from loan and credit requirements.

To be considered a Covered EWA Program, your on-demand payment solution should have the following characteristics:

  • EWA is offered through a third party, not directly from you to your workers.
  • The amount employees can take out does not exceed the amount they’ve earned by the date and time of each transaction.
  • Employees are not paying any fees for using the service.
  • Employees cannot be sued or put into debt collection proceedings if the payroll fails.

Orum.io: Your on-demand payment provider for instant wage transfers 

If you like the sound of faster money movement with an on on-demand wages program besides your typical payroll processing, consider Orum as your EWA processor.

To learn more, contact us here.

Ready to move?Let’s talk.