PayActiv is tapping into the client base of payroll company ADP, landing in the ADP Marketplace, the firm said Wednesday (July 25). Current customers of ADP will be able to utilize PayActiv's services, which include employee financing and financial management. PayActiv enables employees to access earned-but-unpaid income, bridging workers with up to $500.
“Having timely access to earned income alleviates additional debt on already financially stressed individuals,” said Craig Cohen, general manager of the ADP Marketplace in a statement. “By offering PayActiv’s services via the ADP Marketplace, our customers’ employees now have on-demand access to money they’ve earned, and can avoid costly alternatives.”
The companies pointed to the so-called Fin-Tax — high interest rates and fees associated with alternative employee financing solutions, like payday loans — as a key barrier to financial wellness for employees. The press release cited Broadmoor Consulting Managing Principal Todd Baker, which highlighted this challenge.
“Americans in low-income working families are struggling to deal with periodic small financial shocks while spending billions on high-cost payday loans, auto title loans and bank overdrafts that only make the problem worse,” he said. “Employers suffer, too, as financially-stressed employees are prone to health problems, absenteeism and high turnover.”
According to PayActiv CEO and Founder Safwan Shah, companies that leverage an early employee-pay option like PayActiv “can save as much as $50,000 annually for as few as 100 employees” enrolled in the program.
Last month, ADP announced it would be leveraging its network of partners to develop artificial intelligence (AI)-powered enhancements to payroll and human capital management (HCM) solutions. In an announcement, ADP said its second annual Datathon event focused on AI innovation with more than 40 partners, resulting in three top use cases.
They include talent optimization, correlating educational experience to recruiters; user experience, with a 401(k) benchmarking solution for employees; and a business impact tool, which uses AI to link employees to a digital career coach.