Rob Nardelli of DailyPay on earned wage access for financial equality
11/02/2023
In this interview, we explore how companies in the broader payment ecosystem are using instant payments to support business objectives.
Rob Nardelli is Director of Commercial Banking at DailyPay (Off-site), a fintech that provides earned wage access, a financial service that allows employees to receive their pay as they earn it, in advance of their formal payday. We spoke with him to learn more about earned wage access and how instant payments can propel this offering.
Q: DailyPay is a provider of earned wage access. Can you describe how this service works and what earned wage access is?
A: “We partner with leading employers and integrate into their payroll, time and attendance, and human capital management systems to offer earned wage access. Our service allows employees to have a real-time view of their pay as it accumulates and the option to withdraw it before the scheduled pay period. It‘s a way for employers to offer full pay transparency that allows employees to better plan their lives and manage financial disruptions.”
Q: What are some ways that earned wage access has potential to benefit workers?
A: “We feel very strongly about financial equity and inclusion. Earned wage access offers choice and control over money that you have already earned and are entitled to. It is especially important for those living paycheck to paycheck who need more flexible access to their money to pay bills, groceries or gas. For example, if your debit card is declined for insufficient funds while you are filling up your gas tank on your way to work, using the DailyPay app can give you immediate access to money that your employer owes you before the standard two-week pay cycle.
“Without earned wage access, underserved communities are more likely to rely on high-interest payday loans, which are often predatory. A study conducted by Aite Novarica Group (Off-site) showed that 95% of those who were previously reliant on payday loans in any way either stopped using payday loans (81%) or reduced use (15%) after using DailyPay.”
Q: Why would an employer offer this to employees? Are there any incentives?
A: “Employers today must offer flexibility and meaningful benefits to attract and retain talent in what is still a tight labor market for many industries. Earned wage access has proven to be an effective tool in hiring faster and retaining employees longer. The average turnover rate improvement for workers with earned wage access is 35%, according to Mercator Advisory Group (Off-site).
“And employers can provide access to these funds without having to redo their normal payroll processes and deal with the working capital issues of trying to fund an early paycheck, which makes it an especially compelling offering.”
Q: How does the FedNow® Service fit in with earned wage access?
A: “We are excited about the FedNow Service launch because it offers more choice in fast, secure and instant methods of payment. Instant payments are becoming more economical than ever for financial institutions to offer. Right now, our product operates on instant payments and Same-Day ACH, depending on the timeliness in which consumers want their money. The landscape is shifting, though, and a larger instant payments network means we have more opportunity to make real-time transactions a mainstay.
“Having the Federal Reserve backing a real-time payments rail in the United States provides a level of security and peace of mind, as security is a high priority for businesses, financial institutions and workers. Because when a bill is due, speed and safety can make all the difference in the world.”
Q: DailyPay is part of a wider payment ecosystem. What does the future look like in terms of collaboration between financial institutions, service providers and others in the payment space?
A: “Our vision is to make on-demand pay the default way people are paid. Simply put, we‘re looking to bring earned wage access everywhere. To do that, DailyPay is inviting as many stakeholders and partners into the fold as possible. This involves meaningfully expanding our roster of enterprise clients, creating a white-label solution of our services to financial institutions, creating innovative products to enable no-fee instant transfers for our users and exploring international expansion. There is nothing stopping this offering from being commonplace for anyone that stands to benefit from accessing their money as they earn it.”
Want to learn more about the real-world impact of instant payments? Read more FedNow Q&As here.