Up until fairly recent history, pay for your day of labor came as soon as the work had been completed. You’d finish your shift, collect your wages, and head home. But modern payroll isn’t that simple. Weekly, bi-weekly, or even monthly pay cycles have become standard, largely due to the added complexities of calculating taxes, deductions, and ensuring compliance with ever-changing legal regulations. And while these changes make sense from a logistics perspective, the reality is that workers are often left waiting for the pay cycle to end to collect their accrued earnings and tackle their financial obligations.
This is where accelerated wage access (AWA) comes into play. By enabling workers to access their wages before the next scheduled payday, AWA bridges the gap created by modern pay cycles and brings effort and reward closer together. In the latest API Chronicles Livestream, Marqeta’s David Woodward, Senior Strategic Partnerships Manager, UK, sat down with a panel of financial experts from Hastee, Visa, and Marqeta to discuss the transformative potential of AWA for worker financial wellness and satisfaction.
Our panelists included:
• Clemens Moehring - COO of Hastee
• Apurv Chaturvedi - Strategy & Ops at Visa
• Anthony Peculic - VP Product Management - AWA at Marqeta
Watch the full livestream now, or read on to learn more about the key takeaways from their conversation.
Key Takeaway #1: AWA brings effort and reward closer together.
Accelerated wage access echoes the pay models of the past, where work completed is promptly rewarded and a worker’s ability to utilize their pay is not beholden to a predetermined cycle. And in a world where bills and expenses wait for no pay schedule, AWA offers a substantial benefit.
“It’s really about bringing effort and reward closer together,” explained Moehring. “A hundred years ago, you'd be someone who goes to a factory, you do your work, and at the end of the day, you get a paycheck for the work you've done. It’s had a very big effect on how people can manage their money. AWA brings the effort and reward closer together, bringing it back to basics.”
Key Takeaway #2: AWA reduces the need for high-cost credit.
Pay schedules may have changed, but for most people, their financial obligations have not. Bills like rent, utilities, and subscriptions typically have to be paid upfront, which can often put workers waiting for the next pay cycle in the difficult position of using credit to cover expenses. High-cost credit options like payday loans provide quick funds at dangerously high interest rates, often leaving borrowers in an even bigger bind. For workers who rely on their next paycheck to pay the bills, AWA can reduce reliance on these high-cost credit options and give workers an avenue to greater financial wellness.
“If you need money, you are going to get the money somehow. But often the more desperate you are, the worse the long term consequences,” noted Moehring. “And I think the beauty of accelerated wage access is that you have a very transparent, very fair, very clear process of getting short-term liquidity that is based on your earnings so there isn't this debt spiral trap that you might fall into.”
Key Takeaway #3: AWA boosts worker retention and satisfaction.
Workers aren’t the only ones who stand to gain from AWA. For employers, offering this benefit can help to effectively boost worker satisfaction and retention rates. This can help save companies significant time and investment in recruiting, training, and paying new hires. And for companies employing shift-based roles, AWA also encourages workers to pick up additional hours when they know they’ll be able to receive swift payment. This kind of flexibility can help demonstrate to workers that they are valued and cared for, boosting morale and decreasing turnover.
“There is a significant cost to train and rehire new workers. In the UK, the amount stands at around thirty thousand pounds [for] the total cost of hiring and training new staff,” added Chaturvedi. “When employers offer accelerated wage access as a worker benefit, workers are far more likely to stay with the company, which has a direct impact on the employer's cost base. In general, workers feel far more comfortable staying with the employer because the employer is actually thinking about their financial well-being.”
The Future of AWA
As flexible, on-demand pay becomes more prevalent, worker expectations are evolving. Our panelists all shared the belief that AWA will become standard practice in the coming years, leaving behind traditional pay schedules in favor of increased flexibility and autonomy. Adopting AWA now is one way that companies can not only demonstrate care for their workers and their financial wellness but also adopt a forward-thinking approach to the future of pay.
“We're seeing a new generation making up a larger and larger share in the workforce that is living in an on-demand world,” said Moehring. “Some form of pay flexibility is going to become the norm. There will be differences in industry and countries, but I'm one hundred percent sure it's going to be the normal way. We're seeing a new generation making up a larger and larger share in the workforce that is living in an on-demand world.”
If you found these takeaways insightful, check out the full livestream for more thoughts and discussion on the future of accelerated wage access. Here’s a sneak peek of what you can expect:
- How AWA attracts Gen Z workers
- Challenges employers face in implementing AWA
- Insights on regulatory changes affecting AWA
- How AWA improves budgeting for workers
Ready to see the future of payroll? Then reach out to the Marqeta team to learn more about how we can help you implement an innovative on-demand payments solution.
