With the majority of Americans living paycheck to paycheck, financial difficulties continue to be one of the leading causes of stress in employees.
As employees struggle to make ends meet, it has an impact on their work and home life. Money stress also continues to be one of the top reasons for divorce among couples.
With so much of our lives connected to money, it's incumbent upon us to do what we can to control our financial situation. To make things worse, there is a large number of predatory lenders out there ready to take advantage of employees who are struggling to make it to their next payday.
Payday loan scams with interest rates can total up to 400% and are always being pitched to struggling people.
What if there was a better way to get money into the hands of workers without the crippling fees and interest?
Paycheck Advance Apps
Employees overwhelmingly agree it would be easier to budget if they were paid every week. However, this would double the amount of work most payroll divisions would be required to do. While more convenient for employees, it would be much too demanding for an employer to accommodate.
Paycheck advance systems fill this void for employers and ease the financial burden on employees by offering a solution to the biweekly paycheck problem. Paycheck advance companies understand employees may need their money early but can't afford outrageous payday loan prices.
This is where fintech is reshaping the financial industry and how people budget and get their finances back on track. By offering a solution to employees without burdening employers, paycheck advance integrations are quickly gaining momentum.
Introducing Rain – A Better Way To Get Paid
Rain recognizes the need to bridge the paycheck gap between employers and employees.
The traditional payday model involves an employee receiving a biweekly paycheck. The employee works 80 hours and is paid after they have already completed the work. Often an employee needs a small paycheck advance to make ends meet before payday arrives.
It's reasonable for an employee to want to be paid sooner than later for the hours they have worked. It's almost predictable that a vehicle will break down directly between paydays rather than when we have the money for the repair.
This is where Rain partners with employers to offer a convenient and hopefully not needed benefit to their employees. Rain is a payday advance company which integrates with employers and their payroll system.
Employees download the Rain Instant Pay app and may make an early paycheck withdrawal for a small fee – much less than payday loan rates. In essence, employees pay a small fee, comparable to an ATM fee, to access the money they have already earned with their employer.
By offering the ability to access their money when they need it most, employers can increase their employees' financial stability. Employees should focus on building up an emergency fund to pay for unexpected financial problems. However, some unforeseen issues may require more money than an employee has on hand.
Employers strive to keep hard-working employees on their payroll. The ability to offer a paycheck advance in dire circumstances can help build trust and respect between employees and employers. When trust and respect exist, loyalty is created.
How Rain Helps Employers and Employees
Rain utilizes a proprietary platform that integrates with employers' payroll systems. Since employers have enough to deal with, Rain takes the hassle of managing another benefit away and handles the integration and management on their end.
In addition, Rain does not charge employers any fees. This is a free benefit offered to employers, which gives the employee the ability to access their money early if they have no other options.
Easy Access for Employees
Rain has developed a mobile app to help employees manage their finances and make paycheck advance requests. Since most employees use smartphones, a mobile app is the easiest way for employees to connect to their employer-sponsored benefits.
How Rain Pays for the Platform
While Rain seems too good to be true, they still need to pay operating expenses. Rain mitigates these expenses by charging a nominal fee to the employee if and when the employee needs to receive a paycheck advance. The fee is taken out of the employee's future check without immediately impacting their current financial situation.
Again, employers are off the hook when it comes to cost because Rain knows the strain many companies feel in the economy today.
The Benefits of Payday Advance Apps
As discussed before, we hope each employee has a substantial emergency fund, so they never need a payday advance. However, we all know life throws us curve balls when we least expect it, and sometimes we just need a little help.
If used responsibly, payday advances can be used sparingly to help people get back on their feet. They should not be used as a constant way to buy frivolous material things.
By offering employees this financial safety net, employers can better retain hard workers and increase job applications due to word of mouth. If a company genuinely wants what's best for its employees and shows it through its benefits program, it has a better chance of thriving.
Happy employees mean increased productivity and profits.
The Rain Roadmap
By integrating with payroll systems, Rain is also incorporating checking accounts with debit cards for its users. This gives employees without traditional checking accounts instant access to their pay with a debit card that they can use anywhere that accepts Mastercard.
Rain also wants to empower users with checking accounts so they can better track their expenses and stay on top of their finances.
Wrapping It All Up
The payday loan scams are quickly losing momentum due to payday advance apps. This is a win-win for everyone involved, except the unethical payday loan companies. By finding ways to keep employees happy and reduce their stress in both their personal and professional lives, employers have a better chance of retaining quality employees.
Rain offers a solution to help employers provide financial assistance to employees when they need it the most.
Michael launched Wealth of Geeks to make personal finance fun. He has worked in personal finance for over 20 years, helping families reduce taxes, increase their income, and save for retirement. Michael is passionate about personal finance, side hustles, and all things geeky.