Over the past few decades, the ‘real wages’ have remained generally stagnant while inflation has been going up continuously. This has not only affected the workers’ hopes for attaining the ever-elusive ‘American Dream’ but also hampered their ability to make it till the end of the month without looking for some extra cash. This means taking on a gig job, running up the credit card bill, or worse—taking out a high-interest loan.
Payday loans, although popular, do little to alleviate financial suffering as they come with hefty interest payments and other fees. One convenient alternative to these is on-demand pay. On-demand pay is an employee benefit that employers can offer to their employees, either by partnering directly with an on-demand pay provider or by offering the benefit via their time and attendance or payroll provider. This benefit allows employees to access money they’ve already worked for, without waiting weeks for their paycheck. For employers who have on-demand pay already available to them through their time and attendance or payroll provider, no integration or changes to payroll are required. The on-demand pay provider integrates directly with the employers’ time and attendance or payroll provider to record the number of hours employees have worked to ensure an accurate amount of earnings are instantly accessible to employees.
Rather than relying on payday loans, employees can conveniently access their earnings before payday, and at the end of the month, the on-demand pay provider will automatically deduct that amount from their next paycheck. But there’s a catch—most of these companies charge fees every time employees withdraw their earnings early.
One company that stands from the rest is Clair, a New York-based fintech company that charges neither the employer nor the employee. With Clair, employees can join and take advances for free, setting Clair apart from other companies in the same arena. Clair issues a Clair Debit Mastercard to employees that they can use to instantly access their earnings without paying any fees or interest. The way Clair makes money is through their partnership with Mastercard, which pays them a portion of the revenue they make from every transaction made on Clair Debit Mastercards.
Clair’s model is better suited to address workers’ financial needs as it gives them the freedom to access their earnings without further burdening them with excess fees. Besides the financial incentives that Clair offers, it also has the potential to improve well-being among workers and reduce their stress levels. For employers, this means more focused employees, and for employees, it means a better quality of life.