The days of waiting two weeks or more for your paycheck to hit your bank account may be numbered. In an increasingly connected world—and one in which workers have higher expectations of their employers—employees are looking for something a little more immediate.
Enter instant pay benefits. These programs, which have become more popular in recent years, allow employees to withdraw money directly from their paycheck ahead of their designated payday in exchange for a small fee.
On-demand wage access isn't new for employers in the retail and restaurant industries. Companies including Walmart, Dollar Tree and McDonald's have been offering it to workers for years, with many touting the offering as a competitive edge. But the benefit is becoming more popular among other employers as financial stress and the high cost of living squeeze employees' personal finances. And amid changing employee expectations, the benefit is increasingly sought after as well—especially by younger workers.
In a 2022 survey of nearly 3,500 workers by global staffing firm Aquent, nearly 57 percent of respondents said instant pay benefits were slightly or very important to them. Among workers ages 18-24, that number was 83 percent.
Mark Brim, industry leader for services at Aquent, said the ability to send money instantly has become more common with apps such as Zelle and Venmo, and younger workers are expecting the same type of instant access to cash from their employers.
"I think there's an expectation that workers are expecting companies to improve their technology to be able to pay sooner, on demand," he said. "If there's a project that is done successfully, why would I have to wait a fixed period of time to be paid for the work and performance?"
Fast-casual restaurant chain Honeygrow has been offering instant pay through the vendor DailyPay to its nearly 1,000 employees since August 2022. Tom Idler, payroll and benefits manager at Honeygrow, said the company views the benefit as a way to attract and retain talent.
"The director of HR and I were looking for new benefits that could get our employees more excited and really drive retention and draw in new employees," he said. "It just seemed like the kind of thing that would really benefit them."
Nearly 65 percent of employees at Honeygrow use DailyPay, Idler said, and some restaurants are seeing almost 90 percent utilization.
Workers "feel more comfortable in daily life knowing they can get their money when they need it. It helps them with a surprise bill," he said.
Employees Are Feeling the Squeeze
Financial stress is also contributing to the rising popularity of instant pay, said Darlene Miranda, vice president and general manager of enterprise product at DailyPay. She noted that payday doesn't always line up perfectly with when bills are due.
In addition, "I think employers are realizing they play a bigger role in the financial wellness and capabilities in the lives of their employees than they may have done traditionally," Miranda said. "Employers are realizing they do have a responsibility to meet the changing needs of their lives, and pay is one of those areas that is quickly becoming important."
Growing uncertainty surrounding the job market has also led to workers wanting a way to access their cash now, Brim said. On-demand pay benefits allow workers to do so without worrying about increasing their debt. The share of U.S. adults who carry credit card debt increased 6 percentage points from 2022 to reach 35 percent in 2023, according to a survey from Bankrate.
Instant pay "just allows people to better manage their finances without the possibility and use of credit cards," Brim said. "I believe that is driving it."
Challenges with Implementation
While more workers want access to instant pay, implementing such a benefit isn't always a quick process.
For one thing, the service can be difficult to roll out, particularly for companies that have older payroll technology. Honeygrow's Idler told SHRM Online that DailyPay integrated directly with Paycor, the company's payroll provider, which made implementation easy. But for employers with older payroll systems, it may not be as smooth.
"It's important for companies to upgrade their technology, which requires an investment, if this is going to be offered," Brim said.
Instant pay benefits also add a layer of complexity to employers' budgets, meaning they may have to part with cash earlier than they would during a regular payroll cycle, Brim said. There are also certain tax laws that employers should consider.
"This now means this cash is now moving through the organization a lot sooner," he said. "And companies like to hold on to cash for as long as they can."
Despite these drawbacks, Brim said he would still recommend that companies think about adding instant pay benefits. The advantages for employers, particularly those with hourly workers, are often worth the effort.
"There's a tremendous amount of talent that's asking for this," he said. "In this competitive landscape where companies are trying to differentiate themselves, this is a value-add for any company that wants to invest in their technology stack."
Caroline Hroncich is a freelance writer based in New York City.