If you’re one of the millions of Americans for whom payday can’t come soon enough, technology is catching up with your dreams.
Uber, McDonald’s and Outback Steakhouse are among a growing number of employers that are offering workers an on-demand system that gives them access to their money the day after they earn it.
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The Instant Pay Smartphone App
The Wall Street Journal recently wrote about a new smartphone app from Instant Financial that allows workers to draw their pay the day after they performed the work. If they have an emergency or a bill that needs immediate payment, they can collect their earnings with a few swipes on their phone.
The Instant Financial app, which is free to employees, sends a notification to users’ smartphones each morning at 10 a.m. telling them how much they earned the previous day and giving them the option of depositing half the money on a debit card.
Several other apps on the market charge workers a fee to draw cash, often about $3 a transaction. Instant Financial charges employers to use its service instead.
A Threat to Payday Lenders
If the new technology spreads, the big losers might be payday loan companies that specialize in advancing cash at extremely high interest rates. Payday loan outfits typically charge interest rates of $15 per $100 borrowed, the equivalent to more than 400% annually. The loans often come with terms that make repayment difficult. About 12 million Americans take out payday loans each year.
The technology is getting strongest interest from workers with hourly jobs whose work schedules often vary. Advocates say next-day payments allow employees to collect when they need the money, giving them more financial control.
The Journal quoted the human resources director of a company that operates 54 McDonald’s restaurants in Florida. He said about 20% of the franchisee’s 1,300 workers receive money each day. He said they become very attached to the technology and anxious whenever there’s a glitch or service outage. “It’s almost like a drug,” he told the Journal.
(Read more: https://www.debt.org/2018/01/15/payday-loan-alternative-a-good-or-risky-thing/)