Debt-free solution: Flexible payroll comes to PH

No more petsa de peligro? In the realm of compensation, some employees have embraced benefits packages that offer earned wage access (EWA), a system that allows wage earners to access a portion of their earned salaries and get paid on demand.

With the help of Paywatch, Asia’s leading EWA service provider, more than 300 businesses in Asia have enrolled to extend this benefit to their employees.

“Financial stress contributes to retention and productivity issues. This is a pervasive challenge globally, where one out of five employees admits that productivity at work has been impacted by financial stress,” Paywatch cofounder and president Alex Kim says.

A 2019 study by Visa revealed that from a sample of 1,000 American workers spanning various industries, 89 percent expressed willingness to extend their work hours for a company offering EWA, while 79 percent indicated they would consider switching to an employer that provides the same benefit.

“This is the time that the employer should actually take advantage and introduce this innovative solution to their employees, because they actually need it and they will appreciate it,” Paywatch Philippines president Roe del Fierro says in a media briefing.

While the concept of EWA started in the United States, Paywatch Philippines founded the company to provide a debt-free solution that protects employees from unnecessary high-interest loans​.

Paywatch reports an average of 3.9 monthly withdrawals per user, with a 70-percent user activity rate at companies that allow EWA.

“We have seen how EWA restores people’s dignity. They no longer need to borrow from colleagues or friends to settle their utility bills or have fares for public transportation so they can report to work,” Del Fierro adds.

While these benefits sound promising, Del Fierro emphasized that EWA is distinctly different from a loan or a salary advance and it cannot be used for significant expenses like tuition fees. Instead, its primary purpose is to assist in managing day-to-day expenses and bills.

How it works

When employers partner with Paywatch, it enables their employees to access their salaries through the app. For every employee withdrawal, Paywatch will disburse the money and simply bill the company on their regular payday schedule.

Upon registration, employees can withdraw their earnings with a convenience fee of P38 per transaction, without interest charges.

Capped at a maximum transaction size of P3,500, withdrawals become available once the balance is reflected on the app.

Paywatch is the region’s first bank-backed EWA provider, with support from United Overseas Bank, OCBC Bank, Hana Bank, Visa and more. It has also received approval from regulatory bodies such as the Securities and Exchange Commission and Financial Services Commission.

Present also in Malaysia, South Korea and Indonesia, among their more than 300 existing partners include Pizza Hut, KFC, Outback Steakhouse, Guardian and Jaya Grocer by Grab.

In the Philippines, real estate developer Shang Properties, hospitality group Shangri-la Hotels and Resorts, agribusiness group Wilmar International and lifestyle delivery app Pick.A.Roo are among the 30 companies that have selected Paywatch as their EWA partner.

“From our experience in Malaysia, our data show that EWA users are three times more likely to stay on their jobs compared to non-EWA users. This success in talent retention is something that we also want to replicate for our clients here in the Philippines,” Kim says.