Half of Immediate's early wage users switch to Visa Direct within two months

In the two months since earned wage access (EWA) provider Immediate launched Visa Direct as a payment option, the near real-time method is already accounting for 50% of its payments.

When Immediate launched in October 2018, it first offered its users the ability to gain access to their earned, but not yet paid, wages through an ACH transfer that could take several days. But one Saturday this February, just before the pandemic hit, an end-user put in a customer support ticket that prompted the fintech to shift to a faster payments rail.

“We had a guy put in a support ticket on a Saturday morning asking ‘where’s my money?’,” said Matt Pierce, founder and CEO of Immediate. “He needed $10 for gas to get to work and couldn’t wait until it was ACH’ed to his account on Monday. We had one of the guys on the support team Venmo him $10 so he could buy gas. At that point I realized we needed to move money faster."

The following month, Immediate began discussions with Visa about implementing Visa Direct.

"We rolled it out the last week of August and it’s already up to almost 50% of our volume," Pierce said. "I think by the end of the year I would not be surprised if it's 75% of our volume or more.”

Since launching Visa Direct, Pierce noted that it has become Immediate’s preferred method of sending money because it gives its users the instant access to their earned wages that they need while getting rid of the “where’s my money?” help tickets that bog down Immediate’s operations.

The demand for EWA services has mushroomed, upwards of more than a dozen providers in the U.S. along with a host of other EWA companies in the U.K., Mexico and Brazil such as Wagestream and Orka Pay. Demand, which has been strong over the last few years, accelerated during the pandemic to breakneck speeds. Just this yea , Ceridian launched an EWA service in May and AnyDay launched its service in July, joining the ranks of industry veterans such as PayActiv, Branch, Evenand DailyPay.

Once the pandemic hit, Immediate saw a 50% increase in withdrawals. In an effort to help its user community, it waived all fees between March 16 and July 31. Then when it turned off the free access starting in August, it saw that requests continued to rise, unabated by the reinstatement of user fees. Unlike some of the other EWA providers who limit wage access to $500, Immediate does not place a cap unless an employer wants to implement one.

Immediate noted that some employers may also choose to pay for some or all of the user access fees, which are relatively small (up to $3), in line with ATM fees. In some cases, an employer may pay the fee when they provide spot bonuses that are immediately payable or as an incentive when scheduling a weekend shift that may be difficult to staff.

The resonating value proposition of EWA services, with so many consumers in the U.S. and elsewhere living paycheck-to-paycheck, is that it allows them to access a portion of the wages they have worked for and earned ahead of the day they would normally be paid. This acts to smooth out cash flow needs as bills often come in-between pay periods or can come unexpectedly.

“The beauty of this service is that every employer is a prospect,” said Pierce. “It’s especially true in industries with high turnover like fast food or ones that require 24/7 shift coverage such as health care. We’ve also received interest to provide the service to salaried employees. We had a warehouse customer in Florida tell us that when they promoted their warehouse foremen to salaried positions, that they lost the earned wage access and wanted it back.”

Many employers see EWA as a recruiting and retention tool. Domino’s rolled out the service, partnering with EWA provider Branch, to thousands of its franchisees in April as it sought to hire 10,000 new drivers to deliver Pizzas as demand spiked due to COVID-19.

Immediate also has heard about the impact of its services has had on many of its clients, such as Providence Health Management.

“Our team has understandably been stressed on many levels, but we’ve seen a ton of value with Immediate’s earned wage access solution in helping alleviate that stress,” said Anna Bell-Kimbrough, director of payroll services at Providence Health Management, in an emailed statement. “We don’t want our team to worry about their finances or unexpected expenses."

Alleviating that stress by offering earlier access to wages also improves the quality of care, Bell-Kimbrouh said. "That’s critical for us as a health care provider organization. Since the Visa Direct deposit to card option became available a couple weeks ago, we’ve received a lot of positive feedback from our employees. Over time, we expect that over 60% of our team will link a qualified debit card in the ImmediatePay app and make use of the integration.”

According to a PaymentsSource Future of Money Survey conducted in September, half of millennials today are either existing EWA users (22%) or very interested in becoming an EWA user (28%). Another 25% expressed some interest in using EWA services, reflecting their popularity among younger consumers who are getting established in their lives, building families or buying homes.