[HN Gopher] Launch HN: Payflow (YC S21) - Allow workers to acces...
___________________________________________________________________
Launch HN: Payflow (YC S21) - Allow workers to access their wages
instantly
Hi HN, we are Benoit and Avi, co-founders at Payflow
(https://www.payflow.es/). We're making a better app for workers to
instantly access their earned wages. We launched a year ago in
Spain (where we're based!). Anyone in Spain can try our product.
Otherwise, here's a demo video:
https://www.youtube.com/watch?v=GSDlGhoFNyM. 75% of employees in
Spain and Latam live paycheck to paycheck and many have no savings.
They often run out of cash before payday, especially if they have
an unexpected expense. This is an issue for employers too, because
high employee turnover amongst low-income employees is costly. Most
employee perks (e.g. health insurance, flexible benefits, snacks in
the office), which are so familiar to HN, are usually reserved to
white-collar workers in Latam. Said employee perks are too
expensive for blue-collar employers, and more importantly are not
what employees who are struggling with financial instability
actually need. Given the inequality (and wealth) of our societies,
we could argue that low-wage workers ought to be making more in the
first place, but in the meantime people are making what they make
and often have an urgent need to access that money faster. For
example, a few weeks ago, we received a call from an employee who
was stuck at a gas station in the middle of nowhere. He was out of
gas and out of money. We helped him activate his Payflow account so
he was able to instantly stream a portion of his earned wages. This
allowed him to pay for gas and to continue on the road. Every week
we receive emails from potential users (who are unable to use our
app because their employer has not yet signed a contract with us)
and they literally tell us "I need money". We thought employees
would use our app because it's innovative, but they mostly use it
because they really need the money. This came as a surprise to us.
We knew there was a need, but we did not realise the need would be
so pronounced. We met 8 years ago at MIT and discovered a company
called DailyPay that was offering on-demand pay in the USA. We
thought this was really cool, but didn't really see it working
outside of the USA. 8 years down the line, we saw a couple of
players pop up in Europe and realised there was an opportunity to
take on-demand pay to other countries. The pandemic was the perfect
time to start because demand for short-term credit spikes in a
crisis. That's when we decided to get back together in Spain and
launch Payflow for Spain and Latam. Our mobile app allows users to
see and withdraw their accrued wages in real-time. Employees value
our product because it's free, private and instantaneous. It's free
because we charge employers, not workers. More on that below. When
the user makes a withdrawal, we issue a real-time payment to their
bank account, so they receive the money within seconds. On the
backend, we have an integration with the employer's payroll
software so we know how much should be available for them. This is
the tricky part. We need to know how much they have earned and if
they are still employed by their company. It is hard to gather this
information: payroll systems are complex in large companies, most
integrations are on-premise, the market is fragmented and it is
hard to create plug and play solutions. We realised we could solve
it when payroll providers started opening their APIs to third
parties. We saw this as an opportunity to solve a longstanding
problem using technology. In reality, things were (as usual) harder
than expected because a lot of payroll software integrations still
have to be done on-premise. This is a hot market right now: there
are 150+ startups worldwide working on it! The hype is recent, most
of the 150+ are just getting started, less than 10 have raised $5M+
in funding. However, almost all of these startups charge employees
a fee for each transaction. That makes them effectively a payday
loan in disguise. By contrast, we sell our service as a true
employee benefit, which the _employer_ pays for. Our solution is
completely free for employees. This is an important distinction!
Workers living from pay check to pay check have traditionally been
vulnerable to exploitation, and the entire payday industry has a
bad reputation because of this. We're building on what we hope is a
much better foundation by being free for the employee and selling
the product to companies. Our product means that people are much
less likely to go into overdraft at their bank or to take out a
payday loan. Both of those solutions are extremely costly. We want
to fight financial institutions who are taking money from people
who don't have any. Second, we are truly committed to financial
inclusion: we have launched two more products, Learnflow (a
financial education platform to allow employees to learn about how
to manage their personal finances better) and Saveflow (a saving
tool that allows people to set money aside because we believe that
financial freedom starts with healthy saving habits). Third,
numbers show that people use our main service Payflow for very
small amounts ($50-70) so we are not reinventing a loan but instead
helping employees cover unexpected expenses and get paid in a more
flexible way. In fact, we even give employers an optional feature
where they can set a cap on the % of salary that their employees
can withdraw. Some employers really like this function because it
ensures employees will have enough money left over at the end of
the month to pay for their rent! Building a product, as you all
know, is hard! We have a long way to go, but we are passionate
about what we're building. We'd really appreciate any comments and
feedback, we'd love to hear anything that can help make Payflow
better. Thanks in advance!
Author : asukhwani
Score : 77 points
Date : 2021-07-22 08:41 UTC (14 hours ago)
| datavirtue wrote:
| Sort of like this?: https://www.earnin.com/
| asukhwani wrote:
| This is one of 100+ players trying to solve this problem. It's
| a real problem and lots of us are trying to solve it!
| ludwigschubert wrote:
| It's great that you're finding a way to pay people quicker that's
| less bad than payday loans!
|
| What stops employers from paying wages more often right now? When
| I worked in the US, some places would pay you every two weeks.
| With instant bank transfers, couldn't that frequency go down to
| weekly or daily, without the need for a middleman?
| II2II wrote:
| A lot of it would depend upon how payroll is handled. There are
| plenty of employers where the hours worked are _written_ on
| paper, then transcribed to a common document format and sent to
| payroll, then transcribed into the payroll software. Since so
| much of the process is manual, it is likely to be batched and
| performed weekly. Even when it is done daily, the daily is
| unlikely to include weekends (which is shifted to end of day
| Monday). In other words, they would have to completely alter
| their process to actually pay daily. That alone would likely
| make the process more expensive. Doing more bank transfers
| would add more expenses. The software used to handle payroll is
| a middleman for all intents and purposes, and that is unlikely
| to go away.
|
| For what it's worth, I have seen that process used in both the
| private and public sector as well as with organizations that
| employ thousands of people.
| yunohn wrote:
| > There are plenty of employers where the hours worked are
| written on paper, then transcribed to a common document
| format and sent to payroll.
|
| My understanding of this solution is also that it depends on
| the payroll systems? As such, they also depend on manual
| batching effectively, before the advance can be paid.
| jkhdigital wrote:
| As with most components of the financial system, change is
| very slow and painful because even when technology exists
| that leapfrogs previous bottlenecks (i.e. batching due to
| delays in information flow) the behavior of people and
| organizations is tightly adapted to the existing
| expectations. As it stands, most employers effectively get
| free 2-4 week payment terms from their largest suppliers
| (i.e. their employees) which, if removed, would immediately
| increase their working capital requirements by a substantial
| margin.
| asukhwani wrote:
| 100 years ago, people were paid just after they worked. There
| are two reasons why that stopped being the case. Firstly, it's
| a lot of work for the company. Secondly, it's worse for the
| company's cash flow. As others have also replied, the first is
| most significant.
| smoe wrote:
| Since as I understand you are expanding to LatAm, as someone
| having worked in Colombia for the last 5 years on b2b and b2c
| tech products for people on the low to mid side of the socio-
| economic spectrum, some top of mind thoughts. Hope it helps.
|
| - Living paycheck to paycheck is a problem, but the underlying
| cause is more often than not having a job month by month. Even
| more so since the pandemic. The majority of people work in
| informality, only have contractor contracts or work for temp
| agencies with the outlook to eventually get hired into the client
| company.
|
| - There is very little trust within society. People are very
| skeptical, justifiably so, to get screwed over by new financial
| products. Also employers have very little trust in their
| employees. At least from an European perspective it is ridiculous
| what hoops people have to jump trough to get basic jobs.
| Background checks, lie detector, medical exams, etc. Which means
| it can easily take 1 month+ from first interview to starting
| work.
|
| - Economic gap is massive. The decision makers you are going to
| sell your product to often live and have lived their entire lives
| in completely different universes than the potential users. So
| you are going to have mixed experience how empathetic they are to
| the cause. Some certainly are and want to make a change.
|
| - Many people don't have bank accounts where you could transfer
| the money to. As far as I know this has changed quite a bit
| during pandemic but cash and cheques are still very common.
|
| - The very small amounts ($50-70) you mention are quite a bit of
| money here. Minimum salary is $260. A small amount here would be
| more like <=$5. Don't have in my head what the fees and taxes on
| bank transactions are.
|
| - The users are going to have a ~$50 android phone laden with ISP
| nonsense, outdated OS, pre-paid expensive data plans and flakey
| internet connections where they live. So the app needs not just
| be shiny, but efficient.
|
| Within the group we also launched products in Mexico and Peru,
| where some things are different but haven't been involved much in
| that. Happy to chat about if you are interested.
| asukhwani wrote:
| Thanks a lot for sharing these learnings. We will keep them on
| our radar. Sure, would be great to chat!
| fcaballe wrote:
| That's amazing insight smoe.
|
| We are indeed aiming for low income worker population in LATAM
| and your calculus is right:
|
| - Here we see around 50Euros for a salary of 900/1000 so around
| 5 to 7% of your salary withdrawn.
|
| - We would expect even smaller quantities in LATAM.
|
| App is super lean and accessible by every phone and building
| trust among our community (users & companies) is key.
| OoTheNigerian wrote:
| Hi Benoit & Avi,
|
| As part of my advisory business, I've seen a few companies
| tackling this in Africa. My biggest question has been, isn't this
| a "feature" than can be deployed by the existing Payroll
| companies?
|
| These days we have a lot of Credit As A Service companies. Why
| can't a Payroll service connect to them and provide this service
| as an add on.
|
| To summarize my question: can your innovation get distribution
| before the Payroll services get (this) innovation?
|
| Or wouldn't you inadvertently have to encroach into that space
| eventually?
|
| Or do you see yourself extending towards the credit side of
| things?
|
| All the best!
| SimonPStevens wrote:
| This still seems no different from giving the employee a payday
| loan (admittedly at zero percent interest).
|
| It's not going to solve anything because they are just taking
| money early that they will need next month.
|
| It might seem attractive initially, but within a few months the
| status quo will have reset and those employees who were living
| paycheck to paycheck will still be living paycheck to paycheck,
| just now it will be day by day waiting for their accrued amount
| to increase.
|
| I suspect as a company you could do well, but you aren't solving
| any problems for the employee. And you may find that as business
| pressure increases you'll end up exploiting them in some way
| because they are vulnerable and have little protection. It won't
| be long before someone on your board says something like "hey, we
| could make a bit more money if we start charging x% interest to
| get early access pay they won't accrue until next month. That's
| fair because we're taking the risk they might not accrue it all."
| And before you know it you are just as bad as every other payday
| lender out there.
|
| This unexpected expenses thing sounds like poor justification to
| me.
|
| And charging the company Vs the employee is no different. If you
| didn't charge the company they could instead increase the wages
| of their staff by the equivalent amount. You are just taking
| money out of the potential pot that goes to the staff. Staff
| costs is just a single line on our summary p&l which includes
| salaries and benefits.
| gotostatement wrote:
| > It might seem attractive initially, but within a few months
| the status quo will have reset and those employees who were
| living paycheck to paycheck will still be living paycheck to
| paycheck, just now it will be day by day waiting for their
| accrued amount to increase.
|
| Except now they have money available to them in realtime,
| continuously according to the work they've put in, without
| having to wait for discrete points in time where their bank
| account refills.
|
| > This unexpected expenses thing sounds like poor justification
| to me.
|
| The fact that people use it shows people want it. The
| paternalism towards people who don't have enough money is
| really staggering. This line of argumentation reeks of "Poor
| people cant manage their finances - they dont know whats good
| to them"
|
| > And charging the company Vs the employee is no different. If
| you didn't charge the company they could instead increase the
| wages of their staff by the equivalent amount. You are just
| taking money out of the potential pot that goes to the staff.
| Staff costs is just a single line on our summary p&l which
| includes salaries and benefits.
|
| Salaries have other pressures maintaining them besides
| available funds for salary, like minimum wage and market rates.
| As we have known for years based on the utter failure of
| "trickle-down economics", salaries paid and available funds
| often have little to do with one-another.
| antihero wrote:
| I mean, if workers are withdrawing money this month, which I
| presume is then taken off their wages next month, they are now in
| the hole, and even without interest, the problem just gets worse
| and worse, because then the next month they are more likely to
| withdraw early because they have less money.
|
| I do not know if this is financially responsible. How exactly
| will this prevent a horrific snowballing effect?
| sagarm wrote:
| You could say the same about credit cards and their grace
| periods, but plenty of people are able to use those without
| incurring fees.
|
| This product doesn't even seem to have the risk of generating
| fees directly.
| asukhwani wrote:
| jkhdigital is right.
|
| Also, bear in mind that our average user in Spain takes out
| 50$, whilst their salary is >1,000$. We also regularly survey
| users to see chat reasons they make withdrawals for. Our
| conclusion is users are taking small portions of their salary
| to cover unexpected expense.
|
| It's so much better than paying for an expensive overdraft!
| jkhdigital wrote:
| If you step back for a minute, consider this question: when do
| you pay for goods and services? Usually, the moment you receive
| them. When does your employer pay you for the services you
| provide? ...two weeks later, wut
| dd36 wrote:
| Many businesses don't get paid right away.
| [deleted]
| prepend wrote:
| Isn't this problem more easily solved by more access to credit
| cards? It seems like the examples where an advance is needed
| would be more easily, and even cheaply, solved by using a credit
| card and repaying on payday.
|
| There are instant approval credit cards and low credit limit
| cards.
|
| And credit cards even allow cash advances at 20-30% annually.
|
| So, for the example with the gas station customer, using a credit
| card and carrying the balance for a few weeks would cost them $0
| in fees if paid back in the same timeframe as this pay advance.
| Or they could take a cash advance from an atm and pay 30%/365*num
| days until repaid.
| fcaballe wrote:
| Almost none low income workers have access to a zero-rate
| credit card with credit limit available and zero annual fees.
|
| Besides that unpaid balance carries interest.
|
| The idea is to de-risk by bringing their employers into the
| equation :)
| jkhdigital wrote:
| The difference, I think, is that the credit card model is an
| unsecured loan while Payflow seems more like receivables
| financing. Big difference in the perceived risk exposure.
| asukhwani wrote:
| Exactly, the risk is the first big difference. With Payflow,
| you can never spend more than you have already earned.
|
| The second thing is most blue-collar workers in most
| countries can't get credit cards at all.
| RhysU wrote:
| What happens when an employer goes bankrupt? Heck of a lot of
| correlated risk.
| jklein11 wrote:
| Yes I think that is what is most confusing to me about why
| payday loans are so much more expensive. The creditors are
| taking on less risk than with credit cards and yet the return
| is greater.
| jon-wood wrote:
| > We thought employees would use our app because it's innovative,
| but they mostly use it because they really need the money. This
| came as a surprise to us.
|
| I'm having real difficulty working out how this could possibly
| have come as a surprise, of course people are using your pay
| advance app because they really need the money. Why else would
| someone take an advance on their pay?
| asukhwani wrote:
| Good point. It would have been more accurate to state that we
| were surprised at how much people used the app! Over 40% of
| employees that have access to our app use it! Also, we were
| surprised by how high user retention is.
| antihero wrote:
| Most likely because people are desperate for money because
| they need to eat, and your app will create a snowballing
| effect where the next month, they are even more desperate
| because a chunk has been taken off their pay.
| wutbrodo wrote:
| This doesn't make much sense. The counterfactual is that
| they'd be desperate to eat and take out a sky-high APR
| short-term loan. How is the new ability to take zero-
| interest loans "creating" the snowballing effect instead of
| reducing an already-existing one?
|
| This is called "the Copenhagen interpretation of ethics",
| in which any interaction with a situation in an attempt to
| improve it somehow gets warped into shouldering
| responsibility for the preexisting situation in its
| entirety. In this case, you've somehow transfigured
| substantially reducing the cost of credit into "creating
| global poverty".
| RhysU wrote:
| The payday loan puts backpressure on using it because it
| is obvious that the person is paying to use it.
|
| A zero interest loan does not communicate to the user
| that they are reducing their optionality until they are
| stuck.
| wutbrodo wrote:
| This feels like quite a reach.
|
| Understanding that you've received X pesos now and will
| receive X less in two weeks is a lot simpler than
| implicitly calculating the NPV/default risk of high-
| interest loans, both from an intuitive and an explicit
| budgetary perspective.
|
| Even if we (incorrectly imo) assume this dynamic plays
| out the way you say it does, it's quite a bold claim to
| say that this putative psychological effect comes close
| to outweighing a 3000% (or w/e) reduction in APR.
| RhysU wrote:
| No one needs to compute NPV anything. It's not that
| complicated.
|
| All you have to do to get backpressure is to see that
| spending X pesos now means that you have less than X
| pesos in two weeks. Because, fees and interest.
| wutbrodo wrote:
| You said that owing interest somehow implies
| "backpressure" in a way that zero interest loans don't.
| But the phenomenon you describe in this follow-up comment
| applies just as clearly to zero-interest loans: spending
| X pesos now means you forfeit X pesos later. The only
| difference is that, with non-zero-interest loans, you
| forfeit (X+I) pesos later, which requires an implicit
| calculation of whether time-shifting your spending is
| worth losing _I_ pesos.
| Grustaf wrote:
| Don't you worry that easy access to credit will exacerbate
| the problem, leading people ever deeper in depth?
| asukhwani wrote:
| Our average user in Spain withdraws 50$, but their monthly
| salary is >1,000$. We also regularly survey users to see
| chat reasons they make withdrawals for.
|
| Our conclusion is users are taking small portions of their
| salary to cover unexpected expenses.
|
| Users tell us they love this, because otherwise they would
| have had to ask a friend for money.
| Grustaf wrote:
| In that case, wouldn't the real solution to their plight
| be to learn to save money?
|
| I know that is part of your offering, but your main
| product contradicts it completely, doesn't it?
|
| Easy borrowing does not seem to promote saving.
| asukhwani wrote:
| Indeed! That's why we released a second feature called
| "Saveflow". It allows employees to take a fraction of
| their payslip and put it into a virtual piggy bank. We
| just launched it but utilisation is great!
| danielmarkbruce wrote:
| It's probably just the degree. This is a common thread - any
| payments company who has enabled an "instant pay" feature will
| tell you they were surprised how much it was used.
| andrewingram wrote:
| It's a great problem to solve, and killing the payday loan
| industry is a good thing to do.
|
| Out of curiosity, why is the app UI and feature set practically
| identical to Wagestream (I worked there last year, so i'm pretty
| familiar with it)?
| asukhwani wrote:
| Interesting observation! There are 100+ startups in the world
| trying to help with on-demand pay! Most of them have a very
| similar UX/UI.
| lolinder wrote:
| Below are the top few products that turn up in a Google
| search for "on-demand pay". None have the circle-focused
| branding that you copied from Wagestream, and none (except
| Payflow) are synonyms for Wagestream.
|
| A suggestion: you seem to recognize that it's too late to
| deny that you copied Wagestream's branding wholesale.
| Commenting repeatedly on this thread implicitly acknowledging
| the fact while not addressing it head on is not a good look.
|
| * https://www.dailypay.com/
|
| * https://www.ceridian.com/products/dayforce/payroll/on-
| demand...
|
| * https://www.paylocity.com/our-products/payroll/on-demand-
| pay...
| portman wrote:
| Sincerest form of flattery. Plenty of room in this market for
| all players.
| asukhwani wrote:
| Indeed... We think it's a better way to get paid and we hope
| that one day everyone will get paid on-demand (worldwide).
| Let's make that happen! ;)
| nathancahill wrote:
| Wow, you aren't kidding. Even the copy on the landing page is a
| Spanish translation of Wagestream's landing page.
| andrewingram wrote:
| At first I thought I was looking at a newly-launched Spanish
| brand of Wagestream (they have launched in other countries
| under different names, so it wouldn't be unexpected).
|
| I know Payflow has a subtly different value proposition (not
| charging for withdrawals). And it's totally conceivable that
| this is the obvious UI for this feature set, but it's really
| hard to miss the glaring similarities.
| asukhwani wrote:
| Indeed! We really like the idea of making the employer pay
| for it. We think it makes it a better benefit if the
| employee doesn't have to pay.
| sergiomattei wrote:
| Oh, that's why the copy read so weird!
|
| As a native Spanish speaker, the text read awkwardly. I
| chalked it up to regional differences (LatAm v. Spain) but
| this explains a lot..
| robertlagrant wrote:
| Who fancies making Cashriver?
| ck_one wrote:
| What exactly is the same? I just checked and they look
| different.
| lolinder wrote:
| In addition to the app screenshots mentioned by a sibling,
| look at the marketing materials. Many of the headers are a
| translation of Wagestream's headers, and the branding is
| all focused around circles in much the same way (most
| obviously in the app screenshots, but they both re-use the
| image of the circular slider in multiple places on the
| page).
|
| To top it off, Payflow is a (near) synonym for Wagestream.
| shever wrote:
| Scroll down to the app screenshots on payflow.es and
| wagestream.com. The UI for withdrawing cash is pretty much
| identical.
| ck_one wrote:
| Thanks, yes it looks like a 1:1 copy. Interestingly, the
| founders reply to other questions here but not to the
| copy accusation.
| asukhwani wrote:
| In fact, only just yesterday, someone asked me "how come
| Wagestream copied your UX/UI?" ;)
| dmd wrote:
| So... is the ;) an admission that you copied theirs? Does
| YC know about this?
| airza wrote:
| >In fact, we even give employers an optional feature where they
| can set a cap on the % of salary that their employees can
| withdraw. Can you clarify this?
| ludwigschubert wrote:
| Not OP; I read it like this: employers get to decide which
| portion of an employees wages are available for Payflow's early
| withdrawal scheme. After that percentage of the wages has been
| withdrawn through Payflow, the remainder will be paid out
| normally, i.e. at the end of the month.
| maweki wrote:
| And if you pay on hours from the previous month or deduct
| hours not worked in the previous month and not the current
| month (as it mostly is in Germany), this is sensible to not
| have it at 100%.
| asukhwani wrote:
| Suppose an employee has a salary of 1,000$ per month. If the
| employer sets this filter at 50%, the employee can only
| withdraw up to 500$ on Payflow. Makes sense?
| qnsi wrote:
| I worked at a company that was working on this. I left because of
| ethical reasons.
|
| >Workers living from pay check to pay check have traditionally
| been vulnerable to exploitation
|
| And the proposed solution doesn't fix that. Most of those people
| don't have a problem with unexpected expense once a year. They
| don't budget and are short on cash every month. So now imagine
| Bob needs money halfway through the month. He takes out 50% of
| his pay. He uses is for immediate needs and than has to live at
| 50% of his pay for the next 1.5 month.
|
| How is his situation any better?
|
| Also I can 100% guarantee you, most people working in this space
| are working on loans for those users. They don't plan to stay as
| just company benefit. But even if you will 100% never do that I
| just don't the see advertised benefit for the workers.
|
| This is just something that sound nice when you don't think too
| much about it. That explains why the companies are eager to
| implement this benefit at their companies. At the end the workers
| will struggle just as much and the struggle will stay hidden from
| the eyes of the employers, because of the financial problems
| stigma.
| colejohnson66 wrote:
| > And the proposed solution doesn't fix that. Most of those
| people don't have a problem with unexpected expense once a
| year. They don't budget and are short on cash every month. So
| now imagine Bob needs money halfway through the month. He takes
| out 50% of his pay. He uses is for immediate needs and than has
| to live at 50% of his pay for the next 1.5 month.
|
| I think the idea is that it helps people avoids predatory
| payday loans. If Bob needed 50% of his pay for an emergency, he
| could go to a payday loan and end up spending a whole paycheck
| or more just paying it back over time.
|
| The solution is government regulation and societal safety nets,
| not this, but if one's government doesn't fix the problem,
| there's not much you can do besides this.
| fcaballe wrote:
| Hey qnsi!
|
| I am leading BizDev at Payflow, I joined due to ethical reasons
| & social impact. Happen to be that I am southamerican and
| pretty familiar with people living paycheck to paycheck.
|
| The reason why they are better off is because we are the only
| alternative that is free for them: Credit cards, loans, etc are
| not zero-rate. Far from that a loanshark can charge up to 3000%
| for a short term loan in LATAM.
|
| We are bringing employers into the game, to actually do
| something and pay so that their employees get the zero-rate
| that is so popular for high income workers through their cards
| or banks.
|
| What reduces your purchasing power is financial expenses, not
| accessing your money earlier.
|
| We won't solve every money problem, but at least we are solving
| some and reducing low income workers exposure to predatory
| finance.
|
| Hope you appreciate my answer, it was 100% sincere. Fede :)
| curryst wrote:
| That doesn't really address the underlying issue that OP
| pointed out.
|
| People that have infrequent issues where they need to juggle
| money around could use this. They could also simply save
| money, since the implication here is that they have enough
| money but not at the right time. This is a nice option for
| them to have, though. I would also expect people in this
| category to have access to non-exploitative methods of
| financing. If they don't have savings, they probably at least
| have assets for use as collateral in a loan to get the
| interest rate down.
|
| For others, they have frequent issues where they have to
| juggle money around. Their problem is cash flow, not the
| timing. They're going to continue to fall behind on their
| bills. They get a $500 paycheck, and have $450 in bills. They
| need $250 to fix their car, so they take it out. When their
| paycheck comes, they get $250 and can't pay the other $200 in
| bills. The late fees on their $200 bill they can't pay are
| going to stack up to eat the $50/month they could have saved.
| They're still paying financial expenses, they're just in late
| fees instead of interest.
| leetcrew wrote:
| there's a third situation. suppose I spend roughly the same
| amount of money every month as I earn. on paper, this means
| that I should be treading water, at least. but my wages
| actually hit my bank account a week after the end of each
| pay period. in the worst case scenario, I won't see my
| first paycheck until about three weeks after my first day
| of work. at the very least, this cuts into my savings, but
| could leave me permanently in the hole as late fees stack
| up, even though my income matches my spending! a different
| version of this problem can occur in any month where
| paydays and bill due dates fall in the wrong sequence.
|
| credit-worthy people can easily fix this issue with credit
| cards, which fix the paid-in-arrears issue, and also smooth
| out spiky intra-month cashflow. but I can see this product
| being very useful for people who can't get credit cards or
| don't feel responsible enough to use one.
| potamic wrote:
| I have a cynical view of how this product is going to turn out.
| Instant, easy access to wages is going to form habits in users
| to live on a day-to-day basis instead of budgeting for a month.
| With no headroom they will be that much more desperate in an
| emergency and that's the time to attack them with loans. The
| end game is always loans. That's the only way to make money in
| finance.
| sneak wrote:
| Well, unless we abolish individual p2p moneylending, SOMEONE
| is going to loan them money.
|
| Providing more competitive and safe and professional options
| can only help, it can't make an already-bad situation worse.
|
| The only situation worse than having to take a payday loan is
| not being able to shop for a decent vendor who isn't trying
| to screw you.
| gotostatement wrote:
| >And the proposed solution doesn't fix that. Most of those
| people don't have a problem with unexpected expense once a
| year. They don't budget and are short on cash every month. So
| now imagine Bob needs money halfway through the month. He takes
| out 50% of his pay. He uses is for immediate needs and than has
| to live at 50% of his pay for the next 1.5 month.
|
| This is extremely paternalistic and shows how little you
| automatically think of someone who isn't paid a lot of money.
| You think that people who don't have money, their problem must
| be budgeting ("stop eating all that avocado toast!!"), so you
| need to slowly ration out their money "for their own good."
| Complete ideological BS.
| seahawks78 wrote:
| We need universal basic income (UBI)! Period. I believe that in
| a country like US every working adult (18 - 64) should get a
| minimum of 5k a month for paying basic expenses. Furthermore,
| Payflow should be integrated with the government UBI program so
| that anyone can withdraw money against it similar to what is
| being done now. This will go a long way in solving the Payday
| problems/worker exploitation issues as mentioned above.
| gruez wrote:
| >I believe that in a country like US every working adult (18
| - 64) should get a minimum of 5k a month for paying basic
| expenses
|
| $5000? The _median_ pre-tax income in the US is only $2854
| /month. https://www.ssa.gov/oact/cola/central.html
| scarby2 wrote:
| > $5000? The median pre-tax income in the US is only
| $2854/month. https://www.ssa.gov/oact/cola/central.html
|
| Op is probably in NY or SF where that doesn't even make you
| middle class and people who make double that still don't
| feel rich. $2854 a month would be absolute poverty wages in
| many parts of the country.
|
| Conversely my company has announced it's not going back to
| the office ever. I'm tempted to go back to Tennessee where
| I can live live a king on my California middle class
| income.
| hpkuarg wrote:
| Yeah, $5k a month for "basic expenses" is beyond
| ridiculous.
| seahawks78 wrote:
| I don't think it is especially if you are living in one
| of metro regions/tech hubs i.e. SF Bay area, Seattle, NYC
| etc.
| gruez wrote:
| The number itself as it pertains to cost of living isn't
| ridiculous, but the implied policy proposal of "let's
| give everyone $5000 so people in high CoL areas can cover
| their basic expenses!" is ridiculous. The #1 cause of
| high CoL in those areas is because it's a desirable place
| to live and there are more people who want to live there
| than there are housing units, so people bid up the price.
| Giving everyone $5000 wouldn't make it suddenly
| affordable, because everyone would just increase their
| bids by $5000, causing the situation to be the same.
| seahawks78 wrote:
| No I didn't mean blanket 5k to everyone. It could very
| well be dependent on the place you live. 1k - 5k might be
| an acceptable range. If you live in NYC you get more,
| rural Alabama may be not so much. But you get the idea.
|
| Assuming that not everyone can be successful in life (in
| spite of having boatloads of IQ + work ethic) UBI might
| be one of the few ways left to reduce generational in-
| equality. Don't get me wrong - I am no fan of
| socialism/communism and I understand the problems that
| come with a collectivist mindset. But I am also
| practical. I certainly don't want to live in a dystopia
| where a select few "masters of the universe" type rule
| over vast swathe of humanity.
| pb7 wrote:
| Most people don't.
| ceh123 wrote:
| Grad student stipend checking in. $21k/year in a large
| metro area (although not quite on the level of SF/NYC
| expensive). Median household income in my city is
| ~$100k/year.
|
| Yes this is "enough" but no, it is not enough (especially
| after having worked and lived for a few years in a
| medium/low cost of living city).
|
| That being said, $5k/month for "basic expenses" is
| definitely ridiculous. NYC/SF COL is like 30% more
| expensive than where I'm living, not a full 2.8x more
| expensive for basic expenses.
|
| Edit: Also worth noting that in this context the
| $5k/month is spendable, so in SF for example this
| translates to about $82k/year pre-tax income, which
| according to the 2019 census is well above the median
| individual income of ~$52k.
| throwawayboise wrote:
| LOL yeah that "living wage" just keeps going up and up the
| more we're talking about it.
|
| I don't even take home 5K/month and I'm a professional
| software dev. Granted the reason is I am maxing out every
| pre-tax savings plan I can (retirement, HSA, etc.) but the
| notion that a 22 year old couple should be getting 120k/yr
| for doing _nothing_ is absurd.
| scarby2 wrote:
| You have to be very careful with ubi (which I'm a huge fan of
| btw.), it could cause hyperinflation, probably would at $5k a
| month, because we have a pretty severe housing shortage
| there's going to be a whole bunch of people with an extra $5k
| that they could spend on housing so average rent may rise
| significantly.
|
| Instead of jumping to straight UBI we need to build an
| abundance of housing that is of good quality, affordable to
| build, is operated by the state and is available to everyone
| regardless of income on a cost plus model. Also given that
| rent is most people's single biggest expense we could take
| the pressure off the poor. This plan however is politically
| untenable as affordable housing is something that anyone who
| owes money on their home does not want
| sigstoat wrote:
| > Instead of jumping to straight UBI we need to build an
| abundance of housing that is of good quality, affordable to
| build, is operated by the state
|
| since you're willing to take incremental steps, perhaps we
| could have the state stop preventing cheap housing from
| existing, first.
|
| it's not even legal to rent out decent, clean, individual
| rooms in many places.
| UncleMeat wrote:
| I don't buy this criticism. Suppose we were instead paid our
| salary annually as a lump sum at the end of the year and we
| were fighting for biweekly pay days. The same argument could be
| made! What if people misuse the money! The delay helps them
| budget!
|
| The two week (or so) delay between hours worked and money being
| deposited in your bank account is a free loan from you to your
| employer. That's wrong. People should be free to access their
| earned income as soon as they earn it.
|
| I do agree that this sort of product can easily become a payday
| loan system with terrible rates, but streaming your wages as
| you make them sounds like a pure good.
___________________________________________________________________
(page generated 2021-07-22 23:02 UTC)