- Learn the metrics showcasing the tangible positive impact earned wage access can bring to an organization and its employees.
- Hear about the strategic partnership between DailyPay and The Clearing House and how it's revolutionizing money movement.
- Understand the benefits for bank/financial institutions in offering earned wage access to their business clients as a true value-add.
Transcription:
Rob Nardelli (00:09):
Good afternoon. Alright, we're alive down there. My name is Rob Nardelli. I'm the Director of Commercial Banking at DailyPay, the global leader in earned wage access. What's earned wage access? Some of you're probably asking. Very simply, it's a worker gaining access to their wages in real time and not having to wait until regular scheduled payday. And with me today, I'm delighted to say is Elena Casal.
Elena Casal (00:39):
Afternoon again. Everyone, you guys get me twice and I try to save some of my talking points for today so you don't have to hear the same thing twice. But I'm very excited to be here specifically talking about earned wage access and how we revolutionize how people get paid. I'll tell some stories also along the way of why it's really important to me personally as well as why the clearinghouse is very invested in how to leverage the RTP network to better serve all of us in the United States.
Rob Nardelli (01:10):
Really appreciate that. Let's click past the slide where my picture, oh, there it's,
Elena Casal (01:14):
There we go. It had a pop. It was like a pop. Rob is here. We're ready.
Rob Nardelli (01:21):
Thank you Maestro. So the financial challenges facing the American worker, if you've been living under a rock for the last five years, then you probably haven't realized the rising cost in living, the stagnant wages and the higher housing costs and healthcare costs. And let's dig in a little bit deeper, right? What are the American workers facing today? Inflation when it comes to food, gas, utilities, eggs, these are all rising costs that the worker needs to figure a way to budget for. And their wages are not, it's not like 2020 and 2021, there's been stagnant wage growth. So as things continue, the expenses continue to rise. American workers dollars are getting stretched thinner and thinner. And when it comes to the housing costs, in particular in urban areas, I think of myself in my twenties and living in Manhattan where you got two paychecks a month, one went 100% to rent and the other one you just tried to live on for a month.
(02:28):
So it shouldn't come as much surprise that 62% of Americans are living paycheck to paycheck according to the US Bureau of Labor and Statistics. With that we already talked about we healthcare costs, but this doesn't include the waning pool of retirement savings and the waxing pool of student loan debt. So in the face of all this, it actually shouldn't come as much surprise, although it was a surprise for me that 45% of Americans in the last 12 months, according to LendingTree, were late for at least one bill payment. Think about that. When you guys go out to dinner tonight or you're walking the streets, be careful this isn't the best neighborhood in San Francisco. But when you're out there and you see your everyday folks know that one out of two of them essentially have missed a payment for a bill in the last 12 months. Think about what that's doing to their credit score. Think about what's what that's doing to helping them on their financial wellness journey or in this case, quite the opposite. Next slide, Maestro. So this slide, alright, I'm going to do it. Show of hands. For Americans in this room that are in debt, I have two mortgages, so I probably have more than the average person. So I'm going to pose that even a little bit further. How many folks at any point in their life have felt like this poor, unfortunate soul underwater?
(04:10):
So something that most of us can certainly empathize with. And in today's market in particular, now more than ever, we need to bring innovation back to these workers to be able to help them get out of this seemingly despairing hole that this picture perfectly depicts. Next slide please. So with that, our journey with RTP started with this bank, PNC, who came over and said, Hey, we really like what you guys are doing with earned wage access. What do you know about embedded finance and what do you know about real-time payments to be this souped up engine to put into our race car, if you will, of a product? And with that, I'll pass it to Elena in terms of what that has turned into today.
Elena Casal (05:03):
No, I appreciate that. Yeah, so I think all of you guys know in the previous session we talked about where we are with RTP today and that journey. I think whenever, when real-time payments was first talked about and there was a mass task force to get it involved, we did not talk about payroll, right? We did not talk about a lot of use cases that we see today. And that's partly because back in 2013, digital transformation and how money moved was very different than what it is today. And so we launched the RTP network to transform the US payment system to be what consumers and businesses need today and in the future. And earned wage access is a significant one. And just how to think about not only how people get paid, but I'm going to broaden it to this slide on, I think we all play the game a little bit of when we get paid and then what payments go out and your timing, okay, I'm going to pay my MX bill this day and that day.
(06:04):
And so as individuals, we play this game all the time. So think about that then For small businesses, for entrepreneurs, for large corporates. So 99% of the businesses in the United States are qualified as small business. So they're under 500 employees and they have to do this dance just as much as we do as people. And so we were looking at how the RTP network could reimagine your financial success as well as your relationship the bank account. And so that's really the heart of why we started to build it. And we work with financial institutions to unlock new ways for money to move. And earned wage access is very much part of that process. I think as of today or this year in general, earned wage access volume on the RTP network accounts for 15% of all that. So I mentioned on the last panel that we process over a million transactions a day. We're looking to grow that significantly this year with some new senders, which we're excited about. So that percentage is going to go up, but today say 15%, that's almost 200,000 individual payments going for earned wage access. So 200,000 payments a day are hitting consumers to unlock what they need to do today. So that's what I love those stories to tell is because we're really changing how your customers, how the consumers receiving their money of wages of work they already did to do their daily lives.
Rob Nardelli (07:48):
Thank you Elena. It's true. So we talk about this all the time, US payment geeks, and you all know who you are out there, we see a bunch of numbers jump off an Excel spreadsheet and we get super excited.
(08:02):
But when you hear about the actual impact that that has on actual American workers in meaningfully changing the lives of these folks for the better, it certainly gives us some perspective of what we're actually doing here. And this visual you have here with DailyPay move 26.7 billion last year on its platform. And the way I like to think of that is that there are 26.7 billion reasons for why earned wage access should be mass spread and available to everyone. And in particular, if you'll bear with me, there's one story of a client that we have who used this product, he was going out on a first date and he stopped to fill up gas before they went to the restaurant already a red flag for those of us keeping track. But he went to go swipe his debit card and it rolled zero, double zero. You or I would have a credit card, Elena, we would be fine.
(09:04):
We'd figure it out next month as we all have, I saw those hands raised before but he didn't have that option. Instead, while the date is sitting in shotgun, he takes out his app, opens up the DailyPay app, sees that he has wages that he earned that day, but they're not going to be paid until next Friday. A lot of good that's doing him in this scenario hits the instant button through the rails, it processed instantly. I know I can say that because it actually did. And he fills his tank, gets on his merry way, goes out to dinner and evades this issue. It makes you think about what would this individual had done had they not had access to this app. And I know you're all on the edge of your seats waiting to hear and yes, it did in fact work out for this individual. He and her are actually happily married to this day. Yes, yes. Thank you, thank you. So when you think about this innovation, we're always looking for it as bank payment experts, but when you see that impact, it is truly meaningful, truly changing the lives of these American workers.
(10:22):
With that, I'll pass it back to Elena.
Elena Casal (10:24):
No, I think I always think about you all in sitting here listening to us talk. I also try to reflect on how you can take this back to your organizations and where you can maybe work with either your business clients because they employ people or your retail side of the house because you might be receiving these transactions. I'll give maybe another example. So I work with a nonprofit locally and I live in Columbus, Ohio and I work with a nonprofit and I actually do their audit. This is payments. I mean I'm a geek to no end. And they were getting paid for different reasons and I'm just auditing random transactions and I'm going through and I'm like, what? They're paying fees for things that they don't need to pay fees for and I am cheaper than cheap. So I'm a stickler for anyone that is paying bills late. And they're like, well it's convenient to pay it on this day rather than that day. And so I'd rather pay the two bucks. And I'm like, oh my God. So I encourage them to talk to their bank and to talk about real time payments and maybe other options to do that. And I just think about those organizations. So it's Girls on the Run, local chapter three staff members. They are I think what's under millennials,
Rob Nardelli (11:49):
Gen Z,
Elena Casal (11:50):
Gen Z, yeah. See I'm sold hold second. So I mean they're not going to know about the ins and outs payment to the last question, last session around how to encourage, oh you have all these payment rails and these opportunities, you can't have everyone understand that. And also the obligations related to choosing a payment rail. So anyway, long-winded way, they're now using real-time payments for different capacities and now I'm working with them specifically to figure out how they can get paid more often or get their weight because they need it for their daily lives. I just encourage everyone to look at re-imagining payroll one for not only the retail side of each of the consumers, but also where would you offer it to your businesses, your business clients to uncover and transform how payroll is generated, how it's created, where are there pockets of staff that require it more often for different purposes. It could be that they're consultants or staff hourly, then it's easier. There's all sorts of ways to look at re-imagining payroll. And so I just encourage everyone to do that.
Rob Nardelli (13:07):
Thank you. Appreciate it. And you see the stat there, Wade, A year ago we got up on this stage and we talked about how, and this is total shocker for me, right? This company that I work for DailyPay is we just had our 10th year anniversary, so not by any means an old company. And we talked about how I was, I wasn't shocked to hear the number one consumer of real-time payments was PayPal. I mean that any payment geek in this room knew that, but it was actually DailyPay who was the number two consumer of RTP and that was shocking. And now you see that earned wage access has become the number one B2C use case for RTP last year truly showing that it has arrived as a must have benefit for employers and moving towards the next level in this journey, which we've focused around financial institutions being able to offer this to their well if you're a bank to your customer for a credit union to offer this to your members.
(14:13):
And we have our meaningful real impacts of the lives of Americans in terms of 69% of users previously paid late fees due to this less often or stop completely since they started using DailyPay. That's an important stat. I think one of the bigger objectors we got, I see Doug Stern Smith in the audience. So we came up here about three years ago and everyone, the questions were a lot of big brother type questions of well you're promoting bad budgeting and is there going to be any paycheck left by the time payday arrives? And we just offer flexibility and control. They are the drivers driving their own financial wellness journey. And what we found in our research is that yes, folks that are using earn wage access, think of the hand coming out of the ocean. That was me in my twenties, you were in the financial wellness ER, let's call it what it is.
(15:08):
This tool like a defibrillator keeps you upright between paycheck to paycheck. It's the first step, it's not the destination. But using that financial wellness tool, we've seen the numbers that after a year of being able to use this regularly, folks will actually use this product less. I hate when people come up here and talk about, oh we're like a dating app, we want you to eventually get rid of it. I'm happily married now. Yes, I lost my wedding ring. It's a longer story. We can talk about it at the bar. Having said that, you do want to use this tool and then you don't want to be using the defibrillator. You want to be doing good diet and exercise. It's just a stepping stone.
Elena Casal (15:54):
I think it also allows the individual to change their behavior a bit. So it is a safe, secure in structured way to get smaller value payments in faster when you need 'em such that you can learn and be on your financial education journey. I could see how this be also impactful for how people get paid even if they don't aren't sinking and that's how they want to manage their budget. I was joking with my daughters, no, I'm a payments geek and they're 10 and 12 and I occasionally give them cash for doing something in the house. We all have to encourage with different means and when I tell them, oh I don't have the money right now, I don't have my cash, I'll give it to you in a week. They're like, well we just did this, we just made the bed. I need the money right now.
(16:55):
I'm like girl, give me a break. But they want the satisfaction of having it and they're not going to spend it immediately, but they need the satisfaction. So part of it is also, yes, you need it to go pay something, but it's also you want to feel empowered that you did a job and you got rewarded for that activity. That is hugely impactful psychologically as well. And we are in a place where we need a little psychological love and I think this is part of it and financial health and satisfaction is definitely part of it. And so I always think about, I think kids teach you a lot more in life than anyone else. And it's funny how kids want that immediate satisfaction and we teach them as they become adults to wait and we teach them through normal behavior, be like, no, no, no, you don't need it now. Trust us in two weeks we'll pay you. Like what? They're kind of going with their instincts and they're right. Right. So I do think real-time payments and the RTP network helps that journey because they are become the adults that are running businesses and being self-sufficient individuals and they deserve to manage their cash just like businesses immediately. So anyway, just say that.
Rob Nardelli (18:19):
So all I got to that was the chief client officer of the Clearing House didn't have cash or RTP to pay her own daughter.
Elena Casal (18:29):
Well,
Rob Nardelli (18:31):
Alright we do have some other questions here but this seems like a lively bunch. Are there any questions for us? We would like to make this interactive. Don't all rush to the mic. Alright, well as we were coming onto this stage, in fact one of your following panelists or prior panelists posed the question to me of, Hey Rob, do you guys at DailyPay have a solution for smaller banks and credit unions? And I am delighted or was delighted to tell this person that I'm going to share it with the rest of the group that as of two weeks ago, DailyPay is now focused around offering a solution to banks of any size and to credit unions and their members directly. So if you or the financial institutions you represent have any curiosity around how they might be able to give this meaningful, innovative client-centric experience to your clients, we all know the Neos are out there doing it. Please feel free to come find me over in the other room with the giant orange DailyPay side. I'd be happy to have the conversation. With that being said, any questions from the audience? Oh, we have a brave soul.
Elena Casal (20:05):
We have a few now.
Rob Nardelli (20:06):
Oh, we have a couple now.
Elena Casal (20:07):
No,
Rob Nardelli (20:08):
Shaming will get you everywhere.
Audience Member 1 (20:10):
Sorry, I like to know how things work. So I guess
Rob Nardelli (20:13):
Product,
Audience Member 1 (20:14):
Yeah, just understanding. So you say it's wages they've already earned.
(20:20):
Right.
(20:20):
So I do supply chain finance, so we kind of do similar but for suppliers. So how do you know that it's wages that somebody's already earned? Are you getting feeds of that data or how does that work?
Rob Nardelli (20:30):
Fantastic question. So the answer very simply, our classic product DailyPay is a B2B2C. So we will go to McDonald's, Dick's Sporting Goods, Kroger, we will talk to the employer, we will tell them about this product that is at no cost to them other than the time it takes to implement. And they then get to offer that recruitment, retention, turnover, reducing meaningful tool to their employees. So we will connect and we have over 180 plus payroll and time and attendance systems in our network. And then Kroger will say, Hey, turn it on, we'll flip the switch and then all those employees become eligible and then only if you enroll will you be given this service. And then the employee have two different options of going a little bit further because your product, so two different flavors an instant or ATM like fee of 349 to use RTP or next day old reliable ACH is free. And we also have a card option where you can send that to the card for the poor unfortunate soul who had no money while taking out a first date. That can be put to the card at no cost as well. Did that answer your question?
Elena Casal (21:51):
Yes. You're getting a feed of that information of the payroll, that's how you know they turn? Are you getting a feed?
(21:54):
Like a feed,
Rob Nardelli (21:55):
Ohh, feed? I'm sorry. I'm so used to hearing fees. Maybe it's going to grow up in banking,
Elena Casal (21:59):
A feed of data.
Rob Nardelli (22:00):
So yes, whatever's showing in the employer, in this case Kroger's back office payroll, that's what's going to show on the app.
Elena Casal (22:09):
And maybe I'll add one thing, and this is applicable to a lot of, I would say B2C use cases. The positioning of your options dictates behavior significantly more so than the fees on the fees. So there's a lot of UX UI placement of if you put a next day first and then instant second or whatever option that you have, they generally are going to pick the first one. And so through some pilots and modeling, we encourage putting instant payments first just to see how meaningful paying for it versus immediacy was important and it significantly went up in terms of getting that and then the behavior was rewarding. They received it immediately instead of next day. And so they're able to continue to use that option. And so I think about that data as also helpful in other use cases that your organization might be interested in with real-time payments because I'm looking across the whole ecosystem to know that consumers are going to generally pick what is easier or better faster for 'em and the user experience is tremendously important in dictating that.
Rob Nardelli (23:29):
Yeah, you're welcome. We had another question here.
Audience Member 2 (23:34):
It was sort of similar to hers. I understand how the employee integration works, but now you're going to integrate with banks and credit use directly. So how is that set up differently than the other one? I repeat the question. Maybe
Elena Casal (23:47):
Repeat the question.
Rob Nardelli (23:48):
Yes, I'm sorry. If you wouldn't mind, do you have the mic there just for everyone else?
Audience Member 2 (23:54):
Yeah, sorry Joey from American Banker.
Rob Nardelli (23:57):
Hi Joey.
Audience Member 2 (23:58):
So yeah, I understand how the employee integration side works and now you're going to integrate directly with banks and credit unions. Can you explain to me a little bit how that is set up structurally different? Is it different at all?
Rob Nardelli (24:12):
It is exploratory. This is hot off the press. We're still working on finding that the banks do naturally have the direct deposit, but my head of comms is right there and I know I'm getting the double wink of I'm going to keep it at that for now. But we're happy to have those exploratory conversations with financial institutions of any size. That's really the important point that I want to get out here to that message because historically I've come up to seminars and conferences like this and credit unions and community banks have always asked me, Hey, but what can you do to help me? My bank customers and my credit union members, we now finally have a solution and I would be happy to explore that with anyone here in the room.
Elena Casal (24:57):
I think maybe also what's important is when we look at people getting paid, this isn't exactly earned wage access particularly, but we on RTPs see pockets of people getting paid for different use cases that just are new and triggering real estate transactions are what I found some stat that for every real estate transaction there's 30 underlying transactions for residential, it's more complicated for commercial and a lot of them have to do with paying agents and they get paid, they want to get paid at the time of the closing, they might get paid with the cashier's check, they might get paid in the future. And so it's just, I guess another example where we're trying to unlock where there are so many underlying transactions that happen once something gets closed or something happens, we're trying to decouple all of that so it doesn't all happen in batch or it doesn't happen using maybe some legacy systems.
(26:07):
And so I think about that too in payroll for any of you championing payroll is there's a lot that happens in a payroll cycle, right? Taxes, you have state laws, all of that. And so being able to have visibility into what is actual funds to be distributed to employees is part of the journey of unlocking or uncoupling all of the data and transactions that go through. And so that might be also part of the journey for banks and credit unions to know what is their part in decoupling that such that they can make access for their employees.
Rob Nardelli (26:49):
We have another.
Audience Member Kathleen Tobin (26:54):
Hi Kathleen Tobin Private identity. So in terms of that transaction process, as the employee receives that cash during that transaction process, is there a charge from the bank to the place, the money in the account or is that a separate?
Rob Nardelli (27:12):
No, not to my knowledge. Unless the bank charges you for income. Most banks don't, right? We charge the fee to push it out and typically I've not heard of charges.
Audience Member Kathleen Tobin (27:22):
So there's no clearing issues?
Elena Casal (27:26):
No, that's a good question. On the RTP network side, the fees are to the sending financial institution. So the sending organization pays a fee. The receiving financial institution does not get charged a fee from the clearing house. And so it's obviously up to them what they charge their consumers and businesses. Typically on the consumer side, I haven't seen fees.
Audience Member Kathleen Tobin (27:50):
And then my second question is, so from DailyPay, I'm assuming that you're not seeing any fraud. Are you seeing any fraud or issues of fraud around this process?
Rob Nardelli (27:58):
So fraud is something that affects all industries. So I'm not going to try to paint any illusions of grandeur. Having said that, we mitigate that as best we can. And when it comes to fraud, especially love having the clearing house up here, what we used to hear all the time, the faster the payment, faster to fraud. No, I see a major shift here. As a lifelong banker, if you ever try to go send a wire at your local bank and what that process entails, that was a whole other story that we don't have time for. But to your point, you have to do all the due diligence on the front end. If you're going to deal in the world of real-time payment and instant transactions, you can't think of the poor soul there waiting to fill up the tank and go on that first date. If you had to go through a normal wire process that a typical bank would have people call through and let me call you back before end of business day to make the transfer,
Elena Casal (28:57):
I think in this. So fraud will manifest itself in different ways depending on the industry usually regardless of rail, I would think it's more account takeover than anything else. And so kind of the processes that employers and DailyPay and the financial institutions have for authorization and authentication are really what come out that manage that fraud. And I don't have stats by use case if earned wage access even hits a blip on unauthorized, I'll call it. So maybe that just places kind of where the fraud might sit. Thank that's a good question.
Rob Nardelli (29:49):
We only have 20 seconds. Nope. I'm being told we do not have 20 seconds. Alright, thank you guys so much. Really appreciate it. Thank you.