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Digital bank, Revolut is launching a new service called ‘Payday’ that will enable workers to draw out as much as half of their salary weeks before payday, with the bank to work with employers to grant customers access to their cash as they earn it.
As part of the initial launch, Revolut is partnering with UK employers to let employees withdraw a percentage of their income in the month for a small, flat fee. Revolut’s platform and app will plug into an employer’s payroll system, allowing employees to draw down part of their wages earlier in the month.
Revolut says that customers will be able to view their available accrued earnings and select the amount they want to withdraw directly into their main account, helping employees to instantly access their salaries earlier in the month to cover expenses or necessary costs, and avoid getting into debt.
The company says that Payday has no impact on an employee’s credit score and will provide customers with a lower cost alternative to credit cards or payday loans that they might rely on to help with their cash flow problems. Payday provides a seamless experience between salary advance and a host of other innovative financial products, all within Revolut’s financial super app.
Revolut says that Payday is cost-free and simple to integrate for businesses. Cashflow isn’t affected by the move, as employers will continue to pay employees salaries at the end of each month. Additional benefits for businesses include increased employee satisfaction, improved employee financial wellbeing and financial resilience and decreased employee turnover.
The digital bank will charge a flat fee of £1.50 every time a user accesses the pay they have accrued throughout the month, up to a limit of 50% earned the day after each new pay cycle begins. Revolut says the initiative will help alleviate the financial pressure some consumers see between paydays. As salary-on-demand schemes require a partnership with employers, Revolut is in talks with several businesses. It also confirmed that it would issue warnings to customers thought to be overusing the wage access service.
Nik Storonsky, Founder and CEO at Revolut, said “We believe in the importance of making financial wellbeing accessible to all, and this includes focusing on the impact of financial stability on employees’ mental health. After the difficulties of the past year, the last thing employees need now is financial uncertainty and stress. It is important to move away from a situation where many are dependent on payday loans and expensive short-term credit, a reliance that is exacerbated by the monthly pay cycle.“
