PayActiv gives workers access to the money they have earned without requiring them to wait two weeks for their paycheck, said Safwan Shah, the company’s CEO. It advances the money and then is reimbursed by the employer when checks or direct deposits are issued.
“It delivers access to affordable financial services at scale to a financially stressed community. We have two guard rails that are always available,” Shah explained. “One is a cap on the amount you can access, which can be 40 to 60 percent of what you have already earned. Second, you don’t pay per transaction, you only pay $5 a pay period when you use PayActiv. And we don’t provide just access to your money, you can pay bills, load cards, you can call Uber, pay for Amazon through us. or get cash with no fees from a Walmart ATM.”
PayActiv became a Public Benefit Corporation, a certified B corporation, four years ago, Shah said. Its articles of incorporation describe its missions is to deliver affordable financial services. He’s in good company — Patagonia is another B corporation.
“I am the bank of the unbanked and underserved.”
PayActiv also helps them save money, with an interesting twist — they save in time.
“We allow users, who are hourly workers, to save in units of time. A backpack may be three hours of work. Or they can allocate 5 minutes a day toward savings, and in 10 days they can save $15. It all happens behind the scenes.”
Unlike some other wage access companies, PayActiv does not require users to transfer their accounts and direct deposit to the company or use a proprietary stored value card — they can move advanced wages to any card or account they choose.
PayActiv, which launched in 2014, now has more than 100 participating employers, including Walmart where it works with Even’s Pay Access, and empowers more than one million employees, Shah said.
Employers value it because companies have come to realize that financial stress has a real cost to them in employee distraction and occasional absenteeism.
PayActiv is a benefit that costs employers nothing, although some, around 20%, will pay part or all of the $5 fee when an employee takes early payout of his or her earnings.
That’s because it is good business — PayActiv employers saw a 19% reduction in turnover, Shah said, and the cost of replacing an employee can easily run $2,000 to $3,000. It also improves recruitment.
“We’ve become almost a financial services center for the unbanked,” Shah said. Between Uber, bill pay, and records of hours saved, employees may turn to it several times a day. A third say they use it to pay bills, another third to avoid late fees and a third to avoid payday loans.
Fintech - News and Analysis 
Banking And Walter Bagehot — Smart Lessons From A Leading Victorian
Bagehot — The Life and Times of the Greatest Victorian. By James Grant. 334 pages. $29.95
What a match-up: James Grant, financial journalist and in modern terminology a public intellectual, writing on Walter Bagehot, who might qualify for that nomenclature today but was “just” a banker, editor of The Economist, and advisor to some of the leading statesmen of 19th century England.
Grant is suitably impressed by Bagehot’s stunning productivity — 5,000 words a week for The Economist, plus essays on luminaries ranging from Gibbon to Shelby. However, Bagehot might not get awards for work/life balance. In Bagehot’s writing after the Panic of 1857, Grant cites a longish passage and notes that ”Few better observations of the cycle of bankerly feast and famine have ever been written.” But, he adds, this was in a love letter.
The 19th century was a period of great change and a shift of power from the landed aristocracy to the merchant and industrial classes. Bagehot wrote about the reform of 1832 where some in Parliament actually voted to eliminate the infamous pocket boroughs, even at the price of putting themselves out of office. The reforms were overdue — cities like Manchester and Birmingham with growing populations didn’t have any representation. But the reforms had another consequence…those boroughs were sometimes home to a class of elevated statesman who were spared the ordeal of having to face the voters and at least a few contributed wisdom to the debates of the day, Bagehot wrote. The reform destroyed some intellectual constituencies.
The radical Irish journalist E.D.J. Wilson wrote in his obit of Bagehot: “His friends used to say of him, and there was a little exaggeration in the saying, that for a dozen years at least he was an unofficial member of every Cabinet, Conservative as well as Liberal, which has governed these kingdoms. Successive Chancellors of the Exchequer and Secretaries of the Treasury called him into their counsels as a matter of course. And the most illustrious of the statesman who thus consulted a journalist without a place in Parliament or any strength of party connection, would be the first to acknowledge how much they owed to the ‘white light’ of his pure and clear intelligence.”
Ironic then the Bagehot’s Stuckey’s bank sold to what eventually became part of National Westminster Bank, which was acquired by The Royal Bank of Scotland (RBS) which failed — at a cost to taxpayers of approximately £45.5 billion.
Grant notes the Bagehot’s world was one of institutionalized discipline while today’s world — one of paper currencies, floating exchange rates, enormous budget deficits and government policies to protect both investors and depositors against the consequences of banks’ mismanagement — is largely one of institutionalized indiscipline.
In financial journalism, “Bagehot was a superior commentator, thought a middling seer — for every financial writer must squint into the future… HIs attitude was perhaps too cautionary in the short term, and much too complacent for the long term. He worried too much about the single gold reserve and not enough about the distant adverse consequences of government control in banking and credit.”
Grant draws some broad historical comparisons:
“The interplay between money and credit was the source of the recurrent cycles of boom and bust that bedeviled the nineteenth century and continues to plague and mystify the 21st.”
And in some cases Grant makes his commentary just by direct quotation:
“In all customary societies, bigotry is the ruling principle. In rude places to this day, anyone who says anything new is looked on with suspicion…one of the the greatest pains to human nature is the pain of a new idea.”
Sound familiar?