DailyPay to Pioneer On-Demand Pay & Foster Financial Wellness for American Employees

With the goal of giving employees greater choice over when they were paid and assisting them in achieving financial stability, DailyPay developed technology that would allow users to access their earned but unpaid income.
DailyPay staff discuss in a social event
Courtesy: DailyPay
By | 11 min read

Founded in 2015 and headquartered in New York, DailyPay is the pioneer in providing employees instant access to earned wages across a wide range of industries. One in six Americans now has access to DailyPay through trusted payroll service partners such as ADP, Smartlinx and other HR technology providers that offer the DailyPay product to their customers. With DailyPay, employees can pay bills on time and avoid late fees, helping them reach their financial goals while helping their employers increase employee engagement and retention and support recruitment.

Partnering with America’s best-in-class employers, including Dollar Tree, Berkshire Hathaway and Adecco, DailyPay is the recognized gold standard in on-demand pay. Through its massive data network, proprietary funding model and connections into over 6,000 endpoints in the banking system, DailyPay works to ensure that money is always in the right place at the right time for employers, merchants and financial institutions. This platform is building technology and the mindset to reimagine the way money moves, from the moment work starts.

From Paid Problem Happening in Decades….

We have all been conditioned to accept being paid every two weeks or longer. Looking into this matter, it is said that the two-week pay cycle is based on an antiquated financial system dating back to around 70 years ago. While many Americans faced financial hardships during the pandemic, corporations held onto their wages and earned interest on it. By waiting weeks before workers are paid, the company earns interest on that money. This does not seem very fair.

DailyPay engineers and staff have fun during lunch
Courtesy: DailyPay

People point out that the average American worker has saved less than $500, and nearly 80% survive paycheck-to-paycheck. Roughly over 30% of workers run out of funds before payday. They note that workers who feel that their bosses are taking advantage of them by not paying or treating them well, are walking out the door in the ‘Great Resignation’ movement.

Millions of American workers are stuck in the vicious cycle of debt, reliant upon costly payday loans, subject to overdraft fees, and exorbitant interest rates on credit cards. As a result of these structural deficiencies, employees seek financially crippling alternatives like payday loans to address the gaps caused by the system’s failure. Financial health deteriorates, hurting workers’ families, negatively affecting society, and harming employers through higher turnover and absenteeism.

As technology has developed rapidly, it’s irrational to keep doing what we’ve been doing for decades. It is more important than ever for companies to offer unique benefits like on-demand pay to remain competitive. There has to be a better system.

… To A Revolution to Empower Workers Getting Paid Whenever They Want

Being son of immigrants, after college, Jason Lee, the Founder and CEO of DailyPay, spent over 16 years managing equity capital markets on Wall Street. He learned invaluable lessons in structured finance, risk management, and how to assemble a first-rate team. 

“I loved my experiences but was bitten by the entrepreneurial bug.” – said Lee.

In 2015, he was trying to order a pizza when he found out that his favorite restaurant chain was not available through the online delivery service. He did some research and found that it was due to a payment timing issue — the same timing issue endemic to the American payroll system. This was his  ’a-ha’ moment when he realized there was a pay system that revolves around the employer but ignores the needs of the employees. 

“I realized that payroll needed to be rebuilt from the ground up, but this time, putting the employee at the center of the consideration. Also, I thought, what if we built a completely outsourced solution so employers could preserve their existing processes? This is the moment that DailyPay was born.” – Lee talked about the foundation of DailyPay.

DailyPay CEO and founder speaks in a conference
Courtesy: DailyPay

Lee wanted to completely reimagine the way money moves, so together with his co-founder and CTO Rob Law, they built a technology platform capable of powering on-demand pay. Their secret sauce is a simple but powerful feature – they call the “Pay Balance,” which gives consumers full access to their balance in real-time and allows them to make tactical financial decisions based on this knowledge. 

The Pay Balance feature is unique to DailyPay, in that it is the only payments technology platform to offer up to 100% access to one’s earned pay, which enables users to have an accurate understanding of and complete access to their earned wages. 

On average, DailyPay users check their Pay Balance six times a week. This can be seen as a win-win relationship. DailyPay created a powerful technology platform. As a result, employers using on-demand pay are keeping employees up to 72% longer and hiring 52% faster. And employees are saving up to $1,200 a year — money they would otherwise have to pay in overdraft fees, late fees, and payday loan interest.

“That pivotal moment in 2015 certainly shaped me. In retrospect, it allowed me to be in a position to improve the lives of others, specifically by helping people live with greater financial security. I’m thankful for that.” – Lee said.

Jason Lee, with his innovation to help millions of Americans, has been recognized as one of the premier thought leaders in global finance by the International Financing Review and Milken Global Institute.

DailyPay on the Way Satisfying the Expectation

“We live in a world where instant is an expectation,” said Lee. “The evolution of the on-demand economy has created a new generation in the workforce who expects to be paid immediately for services rendered. Employees want the financial security of knowing their hard-earned money can be used in case of an emergency or to pay their bills.”

With DailyPay, employers now possess the software prowess to provide their workers with the financial wellness they deserve, and can alter the way pay periods work. It is not a cash advance, nor are there any catches. DailyPay is precisely what their name says: a worker can track the pay they have accrued, and gain access to it when you want it. The future of work is largely tech-driven, and people can now immediately gain access to their hard earned money without having to wait weeks or longer. 

DailyPay engineers and project managers collaborate
Courtesy: DailyPay

DailyPay is revolutionizing the way workers get paid, by offering choices. Instead of waiting desperately for their paycheck, while the fees and interest costs on their credit cards increase, DailyPay built the tech platform to get what’s rightly owed to them when they want or need it. They can decide that they want their money paid out every day, once a week or however they would like.

The decision is left up to employees. There is no catch. However, like most ATMs, users will be charged around $2.99 to receive their money sooner than the appointed pay schedule. The service also allows users to easily check their balances and transparently track earned wages so they know what is going on.

Jeanniey Walden, Chief Innovation and Marketing Officer at DailyPay says that DailyPay not only is “disrupting payments, benefits and the overall financial system” but also is “a fantastic way to improve employee engagement and retention”. It is obvious: if you know where your money is, and can take your pay anytime you wish, it makes it easy to stay with your company, as you trust them and may not have this choice elsewhere. This on-demand system aligns the intestines of both management and workers.

As American businesses reopen, companies are leveraging on-demand pay to hire quicker and retain employees longer to meet the growing needs of consumers. Employers who partner with DailyPay can expect to have increased retention, productivity and employee satisfaction. A recent study shows that 73% of DailyPay users have an improved opinion of their employers and 74% say that DailyPay has helped reduce their financial stress. According to Mercator Advisory Group, less financial stress creates better interactions between coworkers and customers, therefore improving sales, brand image and customer experience. DailyPay clients can also expect a 63% improvement in turnover.

Market Expansion Following $517.5M Capital Raise

DailyPay’s total raised is $517.5M up to now, according to CBInsights. Its latest funding round was a Series D for $175M on May 18, 2021. With this round of financing, DailyPay welcomes new investor Carrick Capital Partners.

“We have seen the explosion in the on-demand pay industry, and how DailyPay has been leading the category,” said Jim Madden, Co-CEO of Carrick Capital Partners. “We chose to invest in DailyPay now because we believe they are only just beginning to respond to the enormous opportunity they have to provide on-demand pay solutions to global enterprises.”

With this raised capital, the company intends to invest in new market opportunities for its technology platform, in addition to extending its market leadership position in on-demand pay among the largest employers in the world.

“Since 2016, we have partnered with world-class employers to enable their employees to access or save their pay as they earn it,” said Lee – “The initial application of our first-of-its-kind technology platform was to redefine how money moves between employers and their employees. We are now expanding our platform to change the relationship between merchants and their shoppers, as well as financial institutions and their customers. This platform enables us to create a new financial system by rewriting the invisible rules of money.”

80% of Fortune 200 companies that offer on-demand pay partner with DailyPay. Over the last 12 months, the company has reached a number of key milestones. The company grew revenue by 141% in 2020 and released a suite of new products and services that benefit employers, including tools to enable off-cycle payments and remit employee reward payments.

DailyPay staff work and pet-friendly office policy
Courtesy: DailyPay

Additionally, DailyPay launched ExtendPX, its proprietary white-label solution for Payroll/HCM companies. They also continued to drive the shaping of the regulatory environment, including signing a Memorandum of Understanding with the State of California. DailyPay saw significant increases in usage in 2020, remitting payments every single minute of the entire year, to over 6,000 different financial institutions in the United States.

DailyPay competes with some payroll companies and banks who charge overdraft fees, as well as payday lenders, Lee said. That is why just 5 years old, DailyPay is weighing an initial public offering.

“Like all high-growth tech companies, we are considering strategic alternatives, one of which could be an IPO,” Lee said. “We are first and foremost driving value for our customers.”

Recently, DailyPay has strengthened its mission of helping America’s leading employers hire faster and retain employees during the tight labor market through its partnership with UKG (Ultimate Kronos Group), a leading global provider of HCM, payroll, HR service delivery and workforce management solutions.

The expansion of the DailyPay/UKG partnership in June 2021 has enabled DailyPay to further integrate into an additional UKG product, with no additional PEPM (per employee per month) fee, its on-demand pay services through an API integration with UKG Pro, UKG’s award-winning global HCM solution for large and medium-size enterprises, giving employees easy and instant access to earned income before payday. With the expansion of this additional product integration, employers gain flexibility to choose the best of breed vendors of their choice. In just five months, millions of employees received access to DailyPay, which is a win-win for both employers and employees.

The Bottom Lines

It is interesting to see that companies are starting to realize that they must listen to their employees and offer them what they need. DailyPay represents new breed of FinTech startups that are built upon the premise of improving the work-lives of both employees and management. With its open access model, DailyPay is lessening burdensome for the employer. How this company actively provides financial wellness for millions of employees of America’s top companies has inspired other business in this field.

Topic:
  • As a Business Performance Analyst at EnvZone, Molly supplies clients with integrated marketing and sales campaigns into websites. By knowing exactly her mission is to improve clients’ business efficiency, she…