Fiserv technology can pay workers in real time
Employees get their wages before payday
Work today, get paid today. That is how the relationship between some companies and their employees can function, thanks to new digital technology developed by Fiserv Inc.
No more waiting until payday.
The Brookfield-based financial technology company said Monday that its Digital Disbursement solution gives companies the ability to pay their employees in real time.
DailyPay, a New York startup, is the first to announce it will use the Fiserv disbursement solution to integrate instant access features into companies’ existing payroll systems.
While some financial advisers point out dangers in workers having immediate access to their day’s wages, Fiserv contends companies that partner with DailyPay for the new system recruit talent more quickly and reduce employee turnover by an average of 41%.
“We are deeply committed to reducing stress for Americans living paycheck to paycheck,”
“It could mean being able to pay a bill on time and avoid a late fee.” JASON LEE, CEO OF DAILYPAY, A STARTUP COMPANY USING THE FISERV TECHNOLOGY “It could reinforce some bad habits of spending more than what’s coming in.” ERIK KROLL, OWNER, MILWAUKEE-BASED HILLTOP FINANCIAL ADVISORS
DailyPay CEO Jason Lee said in a statement.
“It could mean being able to pay a bill on time and avoid a late fee,” Lee said. “For some, it could mean being able to put food on the table that day.”
DailyPay’s services are available for companies in every state, a spokesman for the startup said, and all of its users have the instant payment tool now.
DailyPay has tailored the technology to send payments to employee bank accounts in seconds.
Along with immediate payment, the tool gives companies the ability to send payments through email addresses and phone numbers, as well as through paper checks.
Fiserv manages the payment process and uses bank-grade security to ensure safe transactions, the company said in a statement.
Companies can use their existing payroll systems to facilitate the instant payments without much setup time, and employees just provide basic information such as their bank account numbers.
Employees get the wages sent to their “available balance” and can access the money by transferring it to their bank account.
Whatever money they transfer from their available balance is taken
off the next paycheck. Transferring money before the time of the paycheck involves a a $1.25 starting transfer fee.
Erik Kroll, who owns the Milwaukee-based company Hilltop Financial Advisors, said he sees advantages of the real-time payment tool. However, Kroll, a certified financial planner, said the daily access to payment should be used by employees sparingly.
“I wouldn’t advise someone to rely on this,” Kroll said. “It could reinforce some bad habits of spending more than what’s coming in.”
Such spending is sometimes inevitable, he said, especially for lower-income earners.
For others, however, they may not know how to manage their cash flow and taking out money every day may only exacerbate those money management issues, he said.
Having money for emergencies and avoiding late fees involves tracking one’s own expenses, cutting out unnecessary costs and putting money into a savings fund, he said.
The feeling of security that you can access your money any day can be counter-intuitive to appropriate savings goals, he said, and may further encourage people to spend their money as it comes in.
Having daily access to earned wages still can benefit savings efforts, Kroll said, if it is used as a bridge to a secure
emergency fund.
Especially for people who can put only a few dollars into their savings each paycheck, the daily access to money can help pay off surprise expenses without forcing them to dip into their savings, he said.
The key to using the DailyPay tool, Kroll said, is using it only when you need it.
Fiserv offers the digital disbursements solution directly to companies, charging them on a per-transaction basis. Startup costs vary by transaction volume.
The technology allows companies such as DailyPay to offer payment solutions for companies to send money securely and efficiently, said Tom Allanson, president of electronic payments at Fiserv.
“Our payments capabilities are helping enable the digital economy and helping businesses connect with their customers by enabling safe, reliable and fast transactions,” Allanson said.