Real-Time Payments Gathering Steam For Workers

Real-Time Payments Gathering Steam for Workers

In perhaps the latest vote of confidence in the movement toward speedier employee compensation, Earnin – which facilitates real-time payroll payments – announced Thursday (Dec. 20) that it has raised $125 million in equity financing.

According to a press release from the company, the Series C financing came from DST Global, Andreessen Horowitz, Spark Capital, Matrix Partners and others.

The company has said that its app allows people to be paid “the minute they leave work,” and stated in the release that its installed base includes employees working for 50,000 employers from all 50 states and across 15 million hours of work done weekly.

Earnin has said that its business model is based not on fees or interest, but on customers paying “what they believe is fair.”

In an interview with a tech outlet, Ram Palaniappan said that when it comes to the general model of compensation, where employees are typically paid every two weeks, “this is such a core pain point. Over three-fourths of the country lives paycheck to paycheck … It’s an issue of fairness. We all have gotten used to getting paid every two weeks, but most employees would rather be paid before they work.”

The publication reported that Earnin helps gig, salaried and hourly workers track their earnings and transfer them into checking accounts in real time via mobile means. The accounts are debited amounts on payday, and the “tips” offered by users are used to fund other users’ withdrawals.

Earnin’s news puts a spotlight, perhaps, on companies that are looking to move the payment cycle beyond the confines of the “every two weeks” mentality.  

For example, this week, payroll management solutions provider Paychex is integrating data into QuickBooks Online to synchronize data for their joint customers – and in real time. The companies noted that part of the focus will be on accelerating employee payments.

And as noted in this space, also this week in the Monday conversation, Gusto CEO Josh Reeves told Karen Webster that “we should look back at the time and day when you had to wait for weeks to get paid after you’ve done the work, in the same way we look back at when we used typewriters instead of using a computer. An idiosyncrasy of the past.”

Once the work is done, he said, employees should be able to get paid for it. The company is getting ready to roll out its Flexible Pay system, where Gusto has been focused on small businesses. Gusto advances funds to the employees and the advanced payment is taken out of the next “official” paycheck.

The movement toward more flexible payroll comes as so many Americans live paycheck to paycheck. In widely quoted figures, Americans spend about $9 billion annually on interest from payday loans, and credit card debt has neared $1 trillion. A study commissioned by Fortune reveals that a significant percentage of the 1,000 individuals surveyed – nearly half – worry about running out of cash between paychecks.


New PYMNTS Report: The CFO’s Guide To Digitizing B2B Payments – August 2020 

The CFO’s Guide To Digitizing B2B Payments, a PYMNTS and Comdata collaboration, examines how companies are updating their AP approaches to protect their cash flows, support their vendors and enable their financial departments to operate remotely.