Earned Wage Access: A gamechanger for employees in PH

Innovative FinTech solution, to help provide instant access to earned income before payday

For most employed Filipinos, ‘Petsa de Peligro’ is all-too-familiar. It is that period during the month when their cash is running low, and payday is still a week or so away. It is also during this time when emergencies and other unforeseen expenses force people to borrow cash to meet these circumstances.  

But what if banks and employers can empower employees to get their wages whenever they need them to avoid these situations instead of waiting for payday? Now, there is a solution, and it’s pretty simple.  

Earned Wage Access (EWA), a concept that is now fast becoming a global trend, enables employees to access their salary before payday and release their already earned salary with a click of a button. Although it’s now seen everywhere around the world, EWA is still a very new concept that started in the USA. This solution gives employees or workers access to their accrued salaries on any given day of the month so that they can use it to pay any immediate expense if they wish in only a matter of seconds.  

Traditionally employees get paid twice a month on two separate dates but, this solution challenges the old way of doing things and presents flexibility by allowing employees to take charge of their finances and cater to their wellbeing.   

The concept of EWA has been known and used in the West for some time now. In fact, in 2017, Walmart in the USA decided to implement this for all its workers with the help of an external fintech company. 

One of the companies to offer EWA is PayKey, a fintech company based in Israel, which developed the end-to-end, white-labeled EWA solution that banks can offer to their corporate clients so employers can include it as an employment benefit to their Filipino workers. 

“People get paid once or twice a month on payday, and it’s been like this for many years. It’s a very outdated way of looking at how salaries are paid,” said Roy Gabriel, chief innovation officer and general manager of PayKey. “If they need money to pay bills and other unanticipated expenses, especially amid the new normal, they need to find another solution. They would ask for an advance, or what Filipinos call ‘bale,’ from their employers, or even borrow from their family and friends, or take a loan from external lenders, which, sometimes can get stressful and painful.” 

“All these happen because they’re waiting for their payday even if they already have worked and earned their money. Employees have this money but cannot access it even when they need it. It’s a very archaic way of looking at employees and salaries and, we want to change that by empowering them through EWA,” he added. 

How EWA works 

If an employer offers EWA to his employees, their staff can simply go into the app to see how much money they earned to date. Then, they can request an advance on salary via the app. Since PakyKey’s EWA feature allows them to transfer the funds to their linked bank account immediately, they can expect the money to be credited as soon as the payment has been confirmed. 

PayKey works with many of the leading banks worldwide to develop a standalone app. It is now working with some of the top local banks to allow this solution to their cooperate accounts, so expect to see EWA in the Philippines early next year. 

Empowering Employees to Take Charge  

A recent study published by Visa revealed that 84 percent of the 1,000 surveyed participants “worry about finances while at work,” and 68% indicated that financial worries truly affect their health and productiveness. The same survey indicates that more than 8 out of 10 employees spend time at work thinking about or dealing with finances each week.  

Needless to say, the time employees spend on their personal finances takes away from their work productivity and motivation. With EWA, employees are given flexible pay dates, allowing them to take charge of their finances and reduce their worries as they go to work every day.  

“Simply put, everyone earns with EWA. The employer gets a happier, more productive worker, the employee feels less stress and is taking control over his life, and the bank gets to offer a new product in the salary arena. This is an area where we did not see any innovation in such a long time,” Gabriel said. 

Helping Improve Employee Retention 

EWA trend improves an employer’s reputation as it shows a company’s dedication to supporting the financial wellbeing of their employees, delivering a positive look for present and future workers. This service is typically offered as part of a workplace benefits package for the employee. 

Based on the 2018 Special Report: Financial Stress and the Bottom Line by PwC, the production cost due to the financial stress amounts to an estimated $3.3 million, excluding the 166,000-dollar cost for failure to report to work for a company with 10,000 employees.  

But if employees have control over their salaries through EWA, then they can handle their finances better. They would also be more encouraged to report to work and be more productive. Gabriel also explained that the solution serves as “a major selling point in a competitive job market” as it aids easier recruitment. 

“In the Philippines, the generation is getting younger. With the coming of age of digital native generations, such as millennials and GenZs, employees now expect everything to happen fast and with just a few clicks. Integrating EWA is one great way for banks to ensure that they thrive now and, in the future,” Gabriel added. 

Today, PayKey is in advance talks with some leading banks in the Philippines and plans to introduce the first EWA app in the local market in early 2022, proving that the future of how people get paid is already here. 

To learn more about PayKey, visit its website at https://paykey.com/.