{"id":2820,"date":"2023-11-14T09:41:19","date_gmt":"2023-11-14T14:41:19","guid":{"rendered":"https:\/\/www.dailypay.com\/2018\/08\/08\/what-are-on-demand-payment-solutions\/"},"modified":"2024-02-23T12:05:03","modified_gmt":"2024-02-23T17:05:03","slug":"what-are-on-demand-payment-solutions","status":"publish","type":"post","link":"https:\/\/www.dailypay.com\/resource-center\/blog\/what-are-on-demand-payment-solutions\/","title":{"rendered":"What are on-demand payment solutions?"},"content":{"rendered":"\t\t
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How the On-Demand Economy Impacts Payroll Models<\/b><\/h2>\n

The on-demand economy gives rise to on-demand pay. What does that mean?\u00a0<\/i><\/b><\/p>\n

Uber, Lyft, Doordash \u2014 odds are you\u2019ve either used these services or, at the very least, heard of them. Sometimes called the sharing economy, \u201cgig\u201d economy or on-demand economy, the new marketplace for requesting and paying for services has furthered our expectations for instant gratification.<\/span><\/p>\n

As a byproduct, the gig economy is also changing the way workers get paid for those services. As services are expected to be on-demand, pay is too.The \u201dPayroll on demand\u201d term was coined as businesses sought flexible payment options to meet employee demand for quicker access to their earnings, blending financial technology with workforce needs.<\/span><\/p>\n

With modern technology, employees shouldn\u2019t have to wait weeks to get paid. What are on-demand payment solutions and why are they becoming indispensable?<\/span><\/p>\n

A Brief History of Payroll<\/b><\/h3>\n

While the development of payroll dates back centuries, the process of actually getting paid in the early days was less than ideal.<\/span><\/p>\n

Depending on who hired you to do work, it could take weeks, months or even years to receive your pay, and deductions could be taken by employers without cause, meaning workers could be in perpetual debt. There were few laws that governed compensation.<\/span><\/p>\n

It wasn\u2019t until the 1930s that a formalized payroll process began to take shape and it was nearly a decade after that when tax institutions created regimented pay schedules to help make the process predictable.<\/span><\/p>\n

In 1957, ADP became one of the first companies to shift from manual to automated payment processing. Automation became even more accessible in the 1980s thanks to the arrival of desktop computers.<\/span><\/p>\n

While the years that follow mark changes in accessibility and features, the core technology of payroll process hasn\u2019t evolved since its inception, and payment schedules have remained rigid since the 1940s. Its long history of stagnancy shows there is little flexibility to pivot when it comes to payroll.<\/span><\/p>\n

Why Traditional Payroll Doesn\u2019t Fit a Modern Workforce<\/b><\/h3>\n

An on-demand economy is fueling the desire for workers to be paid faster. After all, the service they provide is just that: fast and readily accessible. However, the gig economy tends to deal with very frequent but small amounts of money, which makes instant payment via traditional methods fee-intensive and cost-prohibitive.<\/span><\/p>\n

That is precisely why the traditional payroll process isn\u2019t a great fit for the on-demand work economy.<\/span><\/p>\n

With an on-demand economy, patrons beckon workers with urgency, \u201ccome here now. Perform this service for me now.\u201d Under any other circumstance \u2014 manual labor for example \u2014 a worker would expect to be compensated immediately after completion of the job. But in the gig economy the worker can\u2019t reap the rewards instantly, they must wait to be paid by traditional payroll schedules.<\/span><\/p>\n

It\u2019s a mismatch.<\/span><\/p>\n

The gratification for having completed a job satisfactorily is missing, and it\u2019s causing productivity gaps. In fact, 59% of employed Americans, including 70% of hourly workers, say they would benefit from getting paid more frequently than they currently do.<\/span>1<\/sup><\/span><\/p>\n

What Is On-Demand Pay, How Does It Work?<\/b><\/h3>\n

In short, on-demand payments mean that employers give their employees faster access to their pay.<\/span><\/p>\n

Thanks to modern technology, businesses have the ability to let their employees access their earned pay daily if they want to. With DailyPay, it is no longer necessary to adjust an existing payroll process, sign on with multiple third-party providers, or connect APIs to offer an on-demand payment solution.<\/span><\/p>\n

DailyPay is non-disruptive and cost-beneficial for businesses to pursue. Earned pay transfers are made through the web application and transferred to bank accounts at the tap of a button. Options like DailyPay allow users to access their earned pay immediately, or on the next business day, which means users have even more control over their personal definition of on-demand.<\/span><\/p>\n

Why On-Demand Pay is Becoming Indispensable<\/b><\/h3>\n

The excitement around on-demand pay solutions speaks directly to the importance of financial well-being, which is necessary for all industries, and all types of workers.<\/span><\/p>\n

A startling 61% of American adults live paycheck to paycheck.2<\/sup><\/span> If an unexpected cost arises, or if bills are off-kilter with a pay schedule, the costs can be detrimental.\u00a0<\/span><\/p>\n

An <\/span>Employee Financial Wellness Survey<\/span><\/a>, conducted by PricewaterhouseCoopers (PwC) explains how widespread financial stress is in today\u2019s world.\u00a0<\/span><\/p>\n