December seems to be the month for real-time payments podcasts. Last week, we blogged about a real-time payments modernization podcast. Earlier this week Kevin Olsen, aka the Payments Professor, from VSoft , posted an episode on real-time payments and open banking, featuring Andrew Gomez from Lipis Advisors.
Today, TCH’s Payments Nerds posted the latest episode of its podcast series, which covers how Paychex will soon be offering real-time payroll for employers. “Workers are being paid more often … especially in the gig economy,” said Eric Wade, product manager at Paychex. One of the trademarks of the gig economy is that employers “are paying people right away, often at the end of their shift … so people are getting used to being paid more frequently.” For example, Wade added, Walmart launched an on-demand pay product where employees can access their wages before the scheduled pay day. Similarly, tipped employees, such as restaurant servers, like to be paid out at the end of their shift, rather than on a weekly basis.
Retailers, who are often competing for the same workers, see Walmart’s on-demand payroll perk, and restaurants see certain competitors offering same-day payouts on tips to servers. In a tight labor market, the ability to get employees paid faster can attract new workers or help retain existing employees. Now, with payments on the RTP® network, Wade says employers now have the ability to offer same-day pay to employees.
In addition to same-day payroll, Wade said real-time payments on the RTP network also solve for other payroll use cases, such as emergency payroll when a payroll payment fails or the amount is incorrect, or for employee termination (some states, such as California, require that terminated employees are paid on their final day of employment).
Wade cautions that once Paychex launches real-time payroll, banks that don’t offer the capability will likely see increased requests from their customers who are looking for same-day pay. “If their coworkers are getting paid in real time, and they are not, they are going to ask” about it.
Paychex will offer real-time payments through the RTP network in early 2020, Wade said.