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BY GIUSEPPE RICAPITO, September 29, 2016
Surprises aren’t set to a schedule. And sometimes the unexpected can wreak havoc on your financial well-being. You may have been driving to work in the morning, as you always do, and “click,” your check engine light flashes on. It may have been a call at work to pick up your daughter from school. She’s broken out with chickenpox, has the flu, or has been in a medical emergency. Each of these events requires a financial solution, even if it’s just a few hundred dollars. But what can you do if your paycheck is a week or more away? Though surprises aren’t set to schedule, your paycheck is.
Nearly 90 million middle and low income families in the United States are living paycheck-to-paycheck with less than $400 in their savings. Their budgets are tight, monitored, and rigorously maintained.1
Are there outlets that don’t involve predatory loans or invasive fee traps?
PayActiv has been working to answer these questions. Their collaborative business model puts the power of technology in the hands of employers so they can help employees manage their finances despite unforeseen circumstances. Instead of offering high interest rates, treacherous loans and the downward spiral of debt directly to already stressed employees, PayActiv brings the employer into the equation and changes the velocity of pay.
PayActiv is winning because they are providing a real alternative to employees living on the edge of financial ruin.
PayActiv is winning by successfully translating advocacy into a thriving business model within the notion of the “shared economy.”
Security, Dignity and Savings: Gill’s Onions
The employers that use PayActiv services have often attested to the benefits it provides to their employees.
Wendy Morrow, Operations Manager at Gill’s Onions in Oxnard, California noted that her company had done business with PayActiv for nearly three years.
“It has been very very helpful,” she said. “I was leery it would be a lot more accounting procedures, but it takes care of itself. It’s a very simple process and more and more people are using it.”
While PayActiv services employees in the medical sector, manufacturing, and service industry, among others, most of the people using it at Gill’s are agricultural workers employed at a plant that processes, services, and manages the resale of onions.
PayActiv’s manifest cornerstones of its business - Security, Dignity and Savings - are all at play for the employees of Gill’s.
For Security, employees will have access to their money as long as they are working. Dignity and financial privacy are also central to Gill’s relationship with PayActiv, Morrow said.
“I don't even know who’s taking money out. Money is a personal thing,” she added.
Lastly, in Savings, PayActiv’s popularity amongst the employees is driving up participation in the revolutionary financial-wellness resource, “save-by-time” and “save at the source” features that recently won Best of Show at Finovate 2016.
Overall, her company has been elated with how the PayActiv service has engaged its workforce without interfering with the day to day operations of the business.
PayActiv’s esteem with Gill’s Onions is a direct result of their service’s ability to directly benefit both employers and employees. Businesses with a professional conscience realize that a financially secure worker is a happier and more productive in the workplace. The story at Gill’s Onions is the embodiment of “Why PayActiv is Winning” - satisfied workers, pleased employers, and a business that continues to thrive.
Making Waves in the Financial World
Human Resource Executive (HRE) is a monthly magazine that has provided “a unique role as the magazine of record for more than 75,000 human resource vice presidents at primarily U.S.-based corporations, institutions and agencies” since its creation in 1987, said Managing Editor Kristen Frasch. In its September 2016 issue, HRE awarded PayActiv with “Best New Product” for providing the “most straightforward answers to a real problem in the employment community,” Frasch said.
“[It’s] very reasonably priced, it was also very easy to use and well-thought-out in terms of customer need. It’s beauty lay in its equal win-win quality for both employer (in terms of productivity and morale) and employee (in terms of immediate financial need),” she added.
Though some business sectors such as research, engineering or technology may have less worker engagement because they employ less people living paycheck-to-paycheck, “the overall impact of financial stress is being felt in every organization and every industry, we are finding,” she said.
PayActiv provides an unconscious safety in knowing that you can be prepared for an unanticipated payment without having to take out a loan. “The fact that HR does not have to take an active role in administering this benefit, but can reap the rewards in terms of financial health, morale and the engagement of its ranks of lower and middle-income employees is a huge plus to the entire HR function,” Frasch said.
This wasn’t the first accolade, however, that PayActiv has received in academic and media circles for its innovative work in the financial sector. PayActiv has been featured in articles from notable publications such as the New York Times, Bloomberg and Barron’s.
PayActiv was awarded “Best of Show” at Finovate Spring 2016.
The Shared Economy
The upper class of society has been the primary beneficiary of the traditional economy in the past 50 years. While job hunting, workers are searching for new benefits within a growing “shared” economy that can give them access to previously inaccessible services.
PayActiv has been venturing into uncharted territory as a part of the shared economy by offering middle and low income workers access to idle, but earned assets.
Business for Social Responsibility (BSR) “is a global nonprofit organization that works with its network of more than 250 member companies and other partners to build a just and sustainable world,” its website notes.
In their September 2016 Working Paper, “An Inclusive Sharing Economy: Unlocking Business Opportunities to Support Low Income and Underserved Communities,” BSR seeks to uncover company methods and strategies that benefit a high proportion of low-income communities.2
“The sharing economy is transforming the way people access goods and services by matching people who need these items with those willing to provide them,” the paper states. Frasch believes that PayActiv fits into the model of a collaborative system that gives more autonomy to low income workers.
The method of receiving pay has been liberalized by the PayActiv model. The traditional model, which is structured, non-adaptive, and constraining, has fostered a variety of social ills from high interest loans and downward spiraling fee traps.
Their system, serviced by a nominal fee, has streamlined the network binding a worker to their paycheck.
The BSR Working paper’s definitions of a shared economy model reads as descriptors of PayActiv’s social mission “to enable much greater access to crucial goods and services for people and communities who have often been excluded from or are unable to meet their needs through more traditional models.”
PayActiv is truly a “disruptive technology” to the heavily stratified and deeply inflexible system of scheduled payroll. Their business model fits within “an inclusive economy in which everyone contributes to and benefits from local and global economies.”
With more money in hand, workers can engage local and global economies in more diverse ways.
With more money in their pockets, they can plan for the future.
With more money accessibility, workers can pursue a sense of financial stability.
Safwan Shah and his team of “Pay-Activists” are revolutionizing business responsibility by humanizing the relationship between employer and employee.
The PayActiv story is a part of a new economic narrative, one where unexpected payments and setbacks can be dealt with carefully without the possibility of financial calamity.
This new narrative serves to define PayActiv at its core: a business with a social mission to alleviate financial stress for millions of hard-working Americans living paycheck to paycheck.
Remember- surprises aren’t set to a schedule.
Financial stress can be alleviated when employers and employees are given the tools to the job.
A worker deserves Security, Dignity, and Savings.
And PayActiv is here to help.
About the writer: Giuseppe Ricapito is a passionate journalist who believes that employees deserve access to their earned wages. Giuseppe writes whenever he can, and when he can't, he enjoys listening to music, playing the bass guitar, or reading. Giuseppe has a double major in History and English from the University of California, Santa Barbara.
1 Federal Reserve Bureau Report on Economic Well-Being of U.S. Households May 2015
2Business for Social Responsibility. https://www.bsr.org/