Wal­mart’s ad­vance pay­day app part­ner­ship shows ‘stun­ning growth’

The re­tailer’s ben­e­fits di­rec­tor says that about 20% of its work­ers are us­ing Even, which al­lows em­ploy­ees to re­ceive wages be­fore their next pay pe­riod.

Employee Benefit News - - Contents - BY KATHRYN MAYER

The re­tailer’s ben­e­fits di­rec­tor says about 20% of its work­ers are us­ing Even, which al­lows em­ploy­ees to re­ceive wages be­fore their next pay pe­riod.

More than 250,000 Wal­mart em­ploy­ees — just un­der 20% of its work­force — are us­ing its ad­vance pay­day part­ner­ship with fi­nan­cial app Even, the re­tailer said last month at the Ben­e­fits Fo­rum & Expo in New Or­leans.

That’s a 212% growth in par­tic­i­pa­tion from March, when 80,000 em­ploy­ees were en­rolled in the pro­gram.

Wal­mart added the ben­e­fit in De­cem­ber, al­low­ing 1.4 mil­lion of its em­ploy­ees to re­ceive wages be­fore their next pay­day. In­stead of wait­ing two weeks be­tween pay­checks, Wal­mart em­ploy­ees can use Even to ac­cess a por­tion of wages for hours they al­ready have worked. Fi­nan­cial tech com­pany PayAc­tiv also col­lab­o­rates with Wal­mart on the ser­vice, which aims to help work­ers avoid ex­pen­sive pay­day loans and avoid late fees.

“We’ve seen stun­ning growth be­yond our ex­pec­ta­tions,” Scott Pullen, Wal­mart’s se­nior ben­e­fits man­ager, said dur­ing the con­fer­ence, hosted by

Em­ployee Ben­e­fit News and Em­ployee Ben­e­fit Ad­viser.

“A few years ago, we saw that 76% of Amer­i­cans are liv­ing pay­check to pay­check. That just shocked us, and it con­tin­ues to­day. And it stretches across all pay­rolls: It doesn’t mat­ter if you’re mak­ing $20,000 a year or $200,000 a year,” Pullen said.

Wal­mart cov­ers the en­tire cost of Even’s au­to­mated fi­nan­cial man­age­ment tool for both hourly and salaried as­so­ciates. Em­ploy­ees may ac­cess wages early, via a fea­ture called In­stapay, up to eight times per year for free. Af­ter that, em­ploy­ees pay $3 per pay pe­riod for ac­cess to Even Plus, a pre­mium ver­sion of the app that of­fers ad­di­tional fi­nan­cial ser­vices; the $3 also cov­ers trans­ac­tion fees.

“One of the big­gest prob­lems em­ploy­ees have [with money] is tim­ing, when in­come and ex­penses don’t al­ways add up,” Pullen said. “You get paid ev­ery two weeks, but your bills are ev­ery month. And be­cause some­times those tim­ings are off, just even by a day or two, it can drive late fees.”

When Wal­mart be­gan talk­ing to its em­ploy­ees about fi­nan­cial help, they weren’t sure work­ers would want to dis­cuss such pri­vate mat­ters. “But we heard that they wanted our help. They were look­ing for help when it came to man­ag­ing their money,” he said, adding that dur­ing his con­ver­sa­tions with em­ploy­ees, it be­came clear they were over­spend­ing and not putting enough money into sav­ings.

Even, which con­nects to work­ers’ bank ac­counts, aims to help with this prob­lem by al­low­ing em­ploy­ees to meet sav­ings goals and create a bud­get by pin­point­ing ex­actly how much they can safely spend be­fore their next pay­check.

“We’re not naïve. We know there are some neg­a­tives as­so­ci­ated with this. We want to make sure it’s used in mod­er­a­tion so [em­ploy­ees] can only ac­cess wages early one time per pay pe­riod.” Scott Pullen, se­nior ben­e­fits man­ager, Wal­mart

Still, Pullen ac­knowl­edged that there can be some flaws to im­ple­ment­ing a pro­gram like theirs, cit­ing a re­cent opin­ion piece on EBN that dug into some of the risks of on-de­mand pay apps, in­clud­ing hid­den fees.

“We’re not naïve,” Pullen said. “We know there are some neg­a­tives as­so­ci­ated with this.”

To avoid po­ten­tial pit­falls, he said the com­pany put in place a num­ber of “guiderails” around the prod­uct “to make sure [get­ting ad­vance pay] didn’t be­come a habit.”

“We want to make sure it’s used in mod­er­a­tion,” he said. “[So em­ploy­ees] can only ac­cess wages early one time per pay pe­riod. [They] can only ac­cess up to 50% of the net wages that they’ve earned so they can never have a zero-dol­lar pay­check at the end of the cy­cle.”

Jon Schloss­berg, Even’s CEO and co-founder, said al­though there’s no sil­ver bul­let for em­ploy­ees’ fi­nan­cial prob­lems, the app is help­ing peo­ple get more con­trol over their sit­u­a­tion.

“It’s not a loan,” he said. “It’s an ad­vance; you’ve al­ready earned this money. There’s no fees, there’s no in­ter­est.”

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