Walmart’s advance payday app partnership shows ‘stunning growth’
NEW ORLEANS — More than 250,000 Walmart employees — just under 20% of its workforce — are using its advance payday partnership with financial app Even, the retailer said this week at the Benefits Forum & Expo.
That’s a 212% growth in participation from March, when 80,000 employees were enrolled in the program.
Walmart added the benefit in December, allowing 1.4 million of its employees to receive wages before their next payday. Instead of waiting two weeks between paychecks, Walmart employees can use Even to access a portion of wages for hours they already have worked. Financial tech company PayActiv also collaborates with Walmart on the service, which aims to help workers avoid expensive payday loans and avoid late fees.
“We’ve seen stunning growth beyond our expectations,” Scott Pullen, Walmart’s senior benefits manager, said during the conference, hosted by Employee Benefit News and Employee Benefit Adviser.
“A few years ago, we saw that 76% of Americans are living paycheck to paycheck. That just shocked us, and it continues today. And it stretches across all payrolls: It doesn’t matter if you’re making $20,000 a year or $200,000 a year,” Pullen said. Walmart covers the entire cost of Even’s automated financial management tool for both hourly and salaried associates. Employees may access wages early, via a feature called Instapay, up to eight times per year for free. After that, employees pay $3 per pay period for access to Even Plus, a premium version of the app that offers additional financial services; the $3 also covers transaction fees.
“One of the biggest problems employees have [with money] is timing, when income and expenses don’t always add up,” Pullen said. “You get paid every two weeks, but your bills are every month. And because sometimes those timings are off, just even by a day or two, it can drive late fees.”
When Walmart began talking to its employees about financial help, they weren’t sure workers would want to discuss such private matters. “But we heard that they wanted our help. They were looking for help when it came to managing their money,” he said, adding that during his conversations with employees, it became clear they were overspending and not putting enough money into savings.
Even, which connects to workers’ bank accounts, aims to help with this problem by allowing employees to meet savings goals and create a budget by pinpointing exactly how much they can safely spend before their next paycheck.
Still, Pullen acknowledged that there can be some flaws to implementing a program like theirs, citing a recent opinion piece on EBN that dug into some of the risks of on-demand pay apps, including hidden fees.
“We’re not naïve,” Pullen said. “We know there are some negatives associated with this.”
To avoid potential pitfalls, he said the company put in place a number of “guiderails” around the product “to make sure [getting advance pay] didn’t become a habit.”
“We want to make sure it’s used in moderation,” he said. “[So employees] can only access wages early one time per pay period. [They] can only access up to 50% of the net wages that they’ve earned so they can never have a zero-dollar paycheck at the end of the cycle.”
Jon Schlossberg, Even’s CEO and co-founder, said although there’s no silver bullet for employees’ financial problems, the app is helping people get more control over their situation.
“It’s not a loan,” he said. “It’s an advance; you’ve already earned this money. There’s no fees, there’s no interest.”