Rounding it up
Instant Pay and other Earned Wage Access (EWA) benefits let employees access up to 50% of their earned wages before payday.
Employers generally appreciate what Instant Pay has to offer and many report success with introducing it to employees.
Instant Pay comes with many potential benefits, such as enhanced employee productivity, improved employee retention, and less financial stress for the many Canadians who live paycheque to paycheque.
There is no cost to implement Instant Pay for employers, making it an easy perk to offer to employees.
Everybody loves payday. Whether you get your paycheque weekly, bi-weekly, or even monthly, everyone looks forward to taking a peek at their bank account and watching their balance increase on payday.
The waiting process to get to payday, however, can be long and stressful. To make matters worse, your paycheque may not line up too well with when your bills are due.
Enter: Instant Pay.
With Instant Pay, employees can get early access to cash from their paycheques for the time they’ve already worked. Pretty cool, right?
But what do employers think about it? Is it tough to manage? Does it put employees in a bad spot?
Let’s take a look at what some employers think of Instant Pay and what some of the benefits are of bringing this program to your workplace.
What Is Instant Pay?
Before we go too far, let’s make sure we understand what Instant Pay is.
Instant Pay – a type of earned wage access (EWA) – gives employees access to compensation for hours they’ve already accrued. This gives employees access to money that they’ve already earned but perhaps wouldn’t get access to until a traditional payday. To facilitate this, KOHO provides a zero-interest advance on an employee’s wages. Any money the employee withdraws early through Instant Pay is then re-collected at the employee’s next scheduled payday.
To understand how this works, let’s look at an example. Let’s say you work at a company for $20 an hour. Payday isn’t until next week but your car just broke down and you have to pay the repair bill. This week, you’ve already worked 10 hours. That means you’ve already worked and earned $200.
Instant Pay will let employees just like you access a certain percentage of those funds early so you can pay your bills on time.
For example, employees who work for companies that partner with KOHO to administer their Instant Pay program can withdraw up to 50% of their earned wages to their KOHO account for free at the end of each workday. Employees can also withdraw their wages to a non-KOHO account for a small flat-rate fee. It’s as simple as that!
Just remember: any funds withdrawn with Instant Pay are later collected on the regular scheduled payday. It all balances out.
Pros and Cons of Instant Pay
As with anything, there are pros and cons to EWA programs like Instant Pay that employers should keep in mind before offering these programs to their employees.
Some of the many advantages of Instant Pay with KOHO include:
No Fees – Instant Pay is a great option for employees because there are no fees at all if they have a KOHO account. Employees can simply withdraw cash from their paycheque and it’s instantly in their account, ready for use. KOHO takes care of all the backend stuff to ensure employees and employers alike have a seamless plug-and-play system at their disposal.
Instant Payouts – As the name suggests, Instant Pay is, indeed, instant. When employees use it to withdraw some of their earned wages, the funds are available in their KOHO account right away. There aren’t too many things involving money in this world that are truly instant, but Instant Pay is definitely one of them.
Bill & Payday Alignment – The ability to match up when bills are due and when pay comes in is an incredibly valuable tool for employees. There’s nothing worse than getting that utility bill in the mail and having to wait a full week or two for your paycheque to arrive in your chequing account before you can pay.
Stable Income – Some workers, like those who work for tips, are used to managing inconsistent pay. But if you ask them, they’d probably love any tool they can get their hands on to smooth out those paydays so they’re a bit more consistent. Instant Pay can do just that by allowing employees to withdraw when they want, such as during periods where they’ve worked a lot of hours. This can help offset the times where an employee perhaps didn’t work as frequently.
Increase Employee Retention & Productivity – Offering an EWA program, like KOHO’s, can increase employee retention and attract new talent to your business. When employees don’t have to worry so much about making ends meet, they tend to be happier. When they feel like they’re well taken care of by their employers, employees also tend to work harder. With more than 50% of Canadians living paycheque to paycheque, Instant Pay can be a crucial tool for an employee’s financial well-being. It’s also one that employers can easily give their employees to help retain top talent.
Of course, there are some potential drawbacks to an EWA program like Instant Pay, such as:
Confusion Over Paycheque Totals – Employers need to ensure that employees have a firm understanding of how EWA programs work before they offer these benefits to their organization. When employees decide to deduct a percentage of their cheque before payday, their cheque will be reduced by the same amount. This is, perhaps, intuitive, but it’s crucial that employees grasp this completely. There’s nothing quite so unnerving than seeing your paycheque finally arrive with less pay than you were expecting.
Misunderstanding the Fees – Employees should fully understand the fees associated with an EWA service. Instant Pay from KOHO is free for employees if they withdraw funds to a KOHO account. If they do not have a KOHO account, there's a flat $3.50 charge. In reality, that's not all that much to get access to cash right away, especially when you consider that other companies charge exorbitant fees based on the amount of money deducted.
Forgetting Your Tax Responsibility – All this talk of zero fees and instant payments can lead people to forget about their income taxes. Remember, employees still have to pay taxes and other disbursements from paycheques on the full amount that they’ve earned, regardless of when it’s withdrawn. This means that the taxes will come out of an employee’s paycheque when it is issued like normal, lowering the amount of money an employee will receive on their regular payday.
But so long as both employers and employees have a good idea of what to expect, EWA programs like Instant Pay can be a huge help for employees when it comes time to pay bills each month.
So Instant Pay Is Tough to Implement Right?
Employers all over who are reading this article are probably having the same thought, “Instant Pay sounds cool, but I really don’t want to mess with payroll.”
We get it. Messing around with peoples’ paycheques can get ugly, especially if it goes wrong. Having a number of angry employees at your office door because you made a mistake with payroll is not an enjoyable experience.
We can’t speak to the EWA programs offered elsewhere, but implementing Instant Pay at KOHO is as easy as can be, and it’s equally simple to administer moving forward.
Bringing Instant Pay to your organization starts with contacting the customer support team here at KOHO. Once that happens, KOHO’s skilled team of Instant Pay experts can walk you through the steps necessary to bring this payroll benefit to your organization.
Plus, employers never have to pay any fees for the service, and implementing Instant Pay won’t impact your current payroll processes. Most importantly, our expert KOHO customer service team can handle all questions about Instant Pay for your employees, so your HR department won’t have to lift a finger.
What Do Employers Have to Say About Instant Pay?
Generally, Instant Pay and Earned Wage Access programs have been well received by both employees and employers.
Some of Canada’s largest employers have already implemented Instant Pay, including Ameego, OSL, and HYR, so it’s only a matter of time before more organizations add it to their list of payroll benefits. In the US, some of the world’s most recognizable brands have implemented EWA systems, including Arby's, Wendy's, Jimmy John's, and Taco Bell, as well as retailers like Big Lots, Dollar Tree, and Kroger.
One of the earliest adopters in America was a chain of nursing homes that began to offer daily pay to its employees. Leadership at the company has reported that hourly employees like nurses and health techs have had “overwhelmingly positive” experiences with the program. This company, in particular, developed webinars and other educational materials to explain the value of EWA to their employees.
One of the more common comments employers make about Instant Pay has to do with the immediate bump in return on investment that they see after implementing the program. Instant Pay and similar programs allow employees to see exactly what they’ve been paid so far during the week. Some companies have found that this helps employees want to work harder to earn even more.
Instant Pay Sounds Cool, But There’s Got to Be a Catch.
Not really. There’s no fee for employers to implement Instant Pay and employees can access their earned wages for free so long as they withdraw funds to a KOHO account.
But not all employers actually offer an EWA program like Instant Pay. If you work for an employer that doesn’t offer Instant Pay, you can refer them to KOHO and we’ll take care of the rest.
This program gives employees access to as much as $100 from their paycheque up to three days before payday for free. Or, employees can use Early Payroll to get immediate access to the same funds and a financial coach for just $5!
Instant Pay: A Good Perk for Employers & Employees
To put it simply, Instant Pay is a great program that employers can offer their employees for a relatively small to zero investment on the front end. As long as employees are well-informed on how the program functions, Instant Pay can make paying bills and living life just that much easier.
Dan is a runner and writer living in the Washington, D.C. area, where he currently works for a financial services trade association as the Communications Director.