SPOTLIGHT
Banks Fintech Paytech Spotlight

How DailyPay and Pinwheel Are Using Technology To Reinvigorate the World of Payroll

In the world of technology, it seems for a category to truly stand out and earn the ultimate title of “disruptive,” it first must go through a few other nomenclature-related steps. First, it’s defined as a trend, then an innovation, then as a penultimate step. It’s awarded a unique category name. While the name is more hype than substance in some instances, in other cases, it’s a distinct category worthy of its own label. One such category is Paytech. Like its older sibling, Fintech, it’s built on a simple combination of payments and technology. As it has grown, it’s changed how people, businesses, employers, and many other parties in a transaction, transact. 

To earn disruptor status, a company or a category must look at a legacy system, find ways to deconstruct it, and ultimately rebuild it in a way that considers users’ needs now versus when it was created. One key example is in the world of payroll. Despite being driven by a group of global companies, many key functions and data sources remain disparate. Several legacy systems make what, on the surface, may seem like a simple change is actually harder than it appears, ultimately making the rules that drive the system unfair for many involved.

When Anish Basu, Curtis Lee, and Kurt Lin built a company to provide employees with pre-tax benefits transit and healthcare accounts, they ran into a small problem. They learned there was no simple way to offer their product to the handful of large companies that dominate the payroll space. Seeing this challenge and several other legacy brick walls drove the group to found Pinwheel in 2018. The company’s mission is “to build a fairer financial system by unlocking access to payroll.”

By introducing a series of new services through a simple API, Basu, Lee, and Lin were able to cut across existing obstacles and barriers and coverage to over 100 million Americans – more than 70% of paid Americans and create the means to integrate with every major payroll provider, government portal, and gig economy platform. Pinwheel’s core products, including Direct Deposit Switching, Income and Employment Data, and Paycheck Linked Lending, are designed to simplify difficult processes with an easy digital drop-in solutions that enable clients to streamline payroll and HR operations and interactions with 3rd parties. The result is cost savings, reduced risk, and overall stronger loss prevention.

“For us, it was really about picking one of those and using it as a wedge and then augmenting from there,” said Curtis Lee to TechCrunch earlier this month. “Direct-deposit switching was the most urgent and top priority for all of our customers, mostly since there wasn’t much of an alternative.”

On the other side of the payroll spectrum, many of the challenges companies face are due to how money moves. The payment rails used by businesses were designed for a different time when gig work didn’t exist, and employees stayed with a company for life. Fast forward to now, when younger employees prefer to work part-time and switch jobs regularly, companies need a way to pay their workforce that takes the new norms into account. With this in mind, Jason Lee and Rob Law found Dailypay in 2015. The company is focused on building a new financial system with a first-of-its-kind technology platform meant to dynamically change how money moves, intending to change pay for good.

As American businesses reopen, companies are struggling to find ways to hire faster and retain employees longer. Many lack the means to make a payment or provide a bonus to an employee on the spot. DailyPay has emerged as a critical benefit in helping companies staff up to meet the changing demands of their business. The company recently teamed up with PNC Bank and The Clearing House to offer real-time payments over the Real-Time Payment (RTP)  network, creating the ability to fulfill employee payment needs 24/7/365 with unmatched speed and accuracy.

The RTP network provides DailyPay with a safe and seamless way to instantly transfer funds to its user’s bank accounts, giving the users the power of choice and control over their immediate earned income. Along with instant delivery and availability of funds to the recipient, the sender receives confirmation that the funds were successfully delivered. A key attribute of real-time payments for DailyPay users is the ability to receive earned wages instantly as needed without disrupting the employer’s normal weekly or biweekly payroll administration and process.

“We are constantly exploring ways to innovate our industry-leading technology platform and build upon the gold-standard service we provide our client partners and their employees,” said Ron Munkittrick, Senior Vice President, External Operations, DailyPay. “We are thrilled to join forces with PNC Bank and The Clearing House for this groundbreaking technology that will enhance the pay experience for millions of Americans.”

Employers who partner with DailyPay are seeing benefits. A large majority of its customers are experiencing marked increased retention, productivity, and employee satisfaction. A recent study shows that 73% of the company’s users have an improved opinion of their employers, and 74% say that it has helped reduce their financial stress. Its clients can also expect a 63% improvement in turnover.

With innovation coming in many forms, these two companies are certainly breaking new ground and making a difference for millions of people experiencing a different relationship with their employer and how they are paid. Both began with a simple process. Their founders created a solution to address a core problem that users accepted. By focusing on the basis, they have played a core role in enabling a group of companies to establish a new category built off the foundation of Fintech.

Author

  • Managing Editor, North America at The Fintech Times

Related posts

Integral: Changing Consumer Behaviour Pushes Banks to Rethink FX Infrastructure

Polly Jean Harrison

Volkswagen Bank Secures Mobile Transactions and Meets PSD2 Requirements with OneSpan’s Mobile Security Suite

Mark Walker

Longest-standing CIO of RBS’ chilling new book on the real threat of data hacks & cyber terrorism!

Manisha Patel