Thursday , December 8, 2022

In the Midst of the Pandemic, Fintechs Launch Services to Speed Wages to Workers

As workers struggle with cash-flow issues that in some cases were worsened by the coronavirus pandemic, banks and fintechs are working to get wages into employees’ hands faster—sometimes in real time. Two such developments emerged this week from Square Inc. and Immediate Solutions Inc., a company that specializes in speeding up payroll on behalf of employers.

Birmingham, Ala.-based Immediate Solutions on Wednesday said it has forged an integration with Visa Inc. to allow workers to flow their pay in real time via Visa Direct. The service flows the funds to a Visa debit card linked to the ImmediatePay app. Employees can then transfer the money to a bank account or to a debit card they already hold.

“Workers who request early access to their earned wages often need the money quickly, especially if it’s for a health emergency, car repair, or other unforeseen expense,” said Matt Pierce, Immediate’s co-founder and chief executive, in a statement.

The Square Cash App card.

Visa Direct is a so-called push-payments network that relies on a routine known as the original credit transaction. The OCT was originally designed to credit consumers with refunds when they returned merchandise to stores, but both Visa and Mastercard Inc. have harnessed the system in recent years to provide real-time flows to consumers and businesses via debit cards.

The emergence of the service from Immediate Solutions follows by one day Square’s launch of two services for Square Payroll called On-Demand Pay and Instant Payments.

Designed for employees, On-Demand Pay allows workers to move up to $200 in wages to Cash App, Square’s peer-to-peer mobile-payments service. The transfer can be done at no charge, though On-Demand Pay also allows workers to move money to a linked debit card for a 1% charge that is capped at $2. On-Demand Pay is available in 48 states. 

Instant Payments works with businesses that maintain a Square Balance and are also Square Payroll users. The service allows employers to fund their payroll with cash in their Square Balance. This allows Square to trigger wage payment “immediately,” the company says.

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