In the last several years, there has been a secular shift towards digital solutions in the world of payments. This shift became even more aggressive amid the arrival of the COVID-19 pandemic.
Two of the most buzzed about payment trends today are e-commerce and contactless, but these aren’t the only areas worth mentioning. From check replacement to mobile applications, budgeting tools, and money management platforms, technology and digital solutions surrounding prepaid are becoming much more robust.
In an upcoming webinar, Mastercard and Automatic Data Processing (ADP) experts will discuss digital commerce and payroll-specific market trends. They will also explore the benefits of moving away from paper checks and work towards total electronic payroll adoption to better serve the needs of their employees.
The changing labor force is driving payroll trends
Traditionally, prepaid pay cards were used mainly by underserved populations and temporary employees as a direct replacement for costly paper checks. While check replacement is still an important part of the prepaid payroll card value, innovations in the digital payroll solutions today offer new and improved tools to a wider range of individuals.
Part of this shift is because there is a decreasing number of workers opting for a classic 9 to 5 office job. Rather, they are instead doing freelance and gig work as more people see the value in working for themselves; an estimated 44% of the labor force will be freelancers by 2023. As the freelance population grows, so does their needs for a simpler and speedy way to get paid beyond a paper check.
Part of the appeal of the gig economy is the opportunity to access wages as they’re earned. Economic inequality is stark in America, and has only been exasperated by the pandemic. In fact, nearly 40% of American households cannot afford to cover a $400 emergency. While traditional paychecks delay access to these funds, instant access to gig funds can provide much needed relief.
Additionally, millennials and Gen Z now constitute the majority of the American workforce. They are known for being digital natives and are always looking for better digital experiences, which is no different when it comes to managing their money. This gives employers opportunity to provide a more wholistic financial solution to their employees through a wide range of mobile app money management features.
Paper checks don’t cut it
There have long been conversations surrounding the demise of paper checks, and there are compelling reasons for employers to abandon them as a method of paying their workers. First, there are safety concerns related to COVID-19. Paper checks pass through dozens of hands during production and minimizes the ability for those cashing them to stay socially distant.
COVID-19 has also disrupted the mail system, causing severe delays in getting paper checks to households. Financially vulnerable households, such as the 25% of U.S. households that are unbanked or underbanked, are at an even greater disadvantage when it comes to needing to cash checks.
New age pay card solutions better serve banked and unbanked workers alike
Whether it be someone who is financially vulnerable, digitally-native, or relying on gig work, the modern workforce has the need and expectation of getting paid instantly. This expectation has translated past gig work into the traditional world of employment, where traditional employers are beginning to offer instant access to earned wages rather than waiting for traditional payment cycles.
In addition, pay card offerings are going beyond being just a pay card. They have alternative features that make them very attractive to banked and unbanked populations alike, such as on-demand payments, adjustments, reimbursements, and bonuses. Others have features not traditionally seen as part of payroll, such as student loan repayments and retirement, offering workers a holistic payroll solution.
By using the bank alternative of pay cards as a centerpiece to attract both unbanked and younger, digitally-native workers, employers are setting themselves up to have a fully functional digital payroll operation that eliminates the need for costly, inconvenient, and outdated paper checks.
To learn more, register for Mastercard and ADP’s upcoming webinar, Digital Payroll Solutions to Keep Up with the Future of Work, by filling out the sign up form below.