The benefit which warms workers’ hearts

Walmart is cutting stress and strengthening loyalty with the greatest gift an employer could give: Financial Wellness.

For five cold years, Walmart had been looking for a new gift to give its 1.5 million associates at over 5,000 stores. The company’s benefit packages were already robust on the financial front, including solutions to help associates with long-term investing and retirement. But it had become clear to management that something was missing: a Christmas miracle to help Walmart associates reduce everyday financial stress by breaking out of the paycheck-to-paycheck cycle.

“The problem is not just a Walmart problem – it’s a problem that’s pervasive across the nation. It’s this issue of people living paycheck to paycheck. We were trying to identify: How can we fix that problem for our associates? How can we help them?” Scott Pullen, Senior Vice President, Walmart Services and Digital Acceleration

Living paycheck to paycheck is a situation millions of people find themselves in every day—and it’s a problem seen across all income brackets. According to a Nielsen Global Consumer Insights study, one in four families making $150,000 per year or more is still living paycheck to paycheck. For households earning between $50,000 to $100,000, this number increases to one in three. For millions of Americans, this paycheck-to-paycheck cycle causes constant stress. According to the American Psychological Association (APA), 64% of Americans cite money as a “somewhat or very significant source of stress.”

This trend enlarges in vitally important demographics as 75% of Millennials, 76% of GenXers, and 77% of parents with children below age 18 all cite finances as a leading cause of their stress. The APA also explains that all this stress has tangible impacts and lasting effects on the wellbeing of workers.

Problems for employees translates into problems for businesses. A study by PwC showed that financially stressed employees are nearly five times more likely to be distracted by money problems while at work, and are twice as likely to spend at least three hours a week dealing with those problems at work. They’re also twice as likely to miss work on account of personal financial issues, or cite health issues caused by financial stress.

Walmart wanted to help its employees find a way to address this epidemic of financial stress brought about by the paycheck-to-paycheck cycle, so it embarked on a quest to find a solution. Little did they know that their solution would come from a new and unlikely concept from an emerging fintech industry; an early pay app.

Salary finance, stupid!

The concept behind pay apps is relatively simple; they allow employees access to wages they have already earned before receiving a formally scheduled paycheck. To use the software, you would simply pair the app with your current scheduling and payroll system. Meanwhile, employees input information for the bank account they use for direct deposit. With this information, the app is able to confirm when an employee completes a scheduled shift and the amount of money earned for that time. At that point, the employee is able to access some—or all—of their earnings from that shift.

While the overall process is relatively simple and largely the same across different apps, each one maintains its own stipulations pertaining to the frequency and amount of funds employees can withdraw. Some companies, for example, allow employees access to 100 percent of their unpaid wages. Other providers, such as Even, only provide access to 50 percent ensuring employees will still have sufficient funds to cover bills at the end of the month or emergency situations. The Symmetrical pay app platform can be tailored as each employer decides what percentage they wish to offer back between 50-100% and adjusted later depending on the needs of employees.

Each app can also use a different fee structure. Most providers currently charge employees $1 to $5 each time they access funds early, but some apps shift transactional costs to the employer to give to their employees as a free benefit or requires employees to purchase monthly subscriptions.

There is no doubt that these programs are becoming increasingly popular. Hundreds of thousands of employees are already using them on a daily basis. Major corporations such as Uber and McDonalds and, most recently, Walmart and its 1.5 million employees are acting as trend setters of a new global movement. With the new norm starting to catch the mainstream and the rising generation of employees are demanding instant pay and gratification from their mobile devices, payroll conglomerates such as ADP have no choice but to partner or develop their own payday apps if they expect to remain competitive.

What Are The Advantages Of Pay Apps?

Employers that move quick and add this benefit can win over employees from their competitors. Being paid everyday, along with other benefits of financial wellness stemming from pay apps, gives employers a strategic advantage as employee turnover ratio is decreased. So far, employers using the apps have reported improvements in recruiting, retention, absenteeism, and morale. In fact, many employers report that their workers are willing to work more shifts and longer hours when they receive an immediate return on their efforts. In this regard, pay apps can serve as a simple benefit that can help you stand out from competitors when it comes to recruiting and retaining talent. Walmart employees and executives alike have both see a positive increase in company loyalty and culture.

“This is exactly the solution we’ve been looking for. The rest of the marketplace really hasn’t caught up.” Daniel Eckert, Senior Vice President, Services and Digital Acceleration at Walmart

Walmart’s Model

Walmart pays about 25% of the employees’ monthly subscription fees for Even.

Employees’ monthly subscription costs them about five dollars a month which is deducted from their monthly paycheck. To ensure employees are not abusing their now liquid purchasing power, Walmart only permits users to withdraw 50 percent of their earned salary. This ensures that workers will still have funds to pay important expenses or save and invest at the end of each month. Walmart employees can also participate in instant cash pickup at any US walmart, or just wait one business day for the money to transfer directly to their bank accounts.

Reception of Employees

Employee adoption of the pay app platform far surpassed Walmart’s expectations. Pullen was expecting anywhere between 5 and 10% adoption, expressing “that would have been good for a lot of the benefits that we had.” Howerever, less than one year after the launch, over a third of Walmart associates have used the platform. Eckert added, “The growing performance that we’re seeing month on month is stunning. It’s beyond our expectations.”

Furthermore, Eckert confirmed that higher income bracket employees were also using the platform by saying, “What’s interesting is that you see the same adoption for hourly and salaried associates.”

The rollout of Even was announced with a small marketing push through Walmart’s internal channels—what followed was a pattern of rapid organic adoption over the next several weeks. Eckert says, “I think a lot of it is driven by word of mouth, because the associates using it are in love with it.” To put these numbers into perspective, among Walmart associates, over 516,000 associates have tried the platform, and 948 stores have adoption rates of 50% or higher.

Over 50 thousand people have left reviews for the Even app on the google play and the app store with a combined 4.9 stars out of 5. Most of the reviews look similar to these:

“If I’m not stressing about having to pay for an extra bill, or a kid’s birthday party that weekend, then I can just focus on work.” Lettie Donnell

“Great app. Heard about from work and its great if you need money from your next paycheck without any fees. My work place gave me a free month and I shall continue to use it month by month.” Leo Guevara

“I’m a single mom and it helps out so much when your pay is bi-weekly.” Julie Beach

“Easy to use and fast!” Naomi Trawick

“ALWAYS BEEN A GREAT AND EASY EXPERIENCE AND A LIFESAVER AT TIMES!” Shelly Madrigal

“This app has that sigh of relief you sometimes look for when times get tough in between paychecks. I very highly recommend!” William Kelly

Simple Process, Great Service

Along with the employees, Walmart’s Services Technology Senior Manager Derric D’Souza had very nice things to say about the talented fintech developers. He said,”“It was super easy to work with Even. Their developers and the leadership were very synced.”

From the beginning, Walmart was impressed by Even’s team. Eckert notes, “One of the best things about Even was their willingness and ability to get in stores with our associates to truly understand their needs, and continue to design their product against those needs. It’s pretty remarkable.”

Walmart appreciated that Even had taken the time to navigate the regulatory landscape across state payroll laws, and build an application with a seamless capacity to work with payroll systems. As Even builds out additional functionality for its financial wellness platform, the entire team is keeping Walmart associates in mind. Scott Pullen, Senior Benefits Manager, says of Even, “They’re constantly asking: What is the data telling us, what are the associates using the product for, how are they changing, how could we improve the product to get better?”

From a technical perspective, the relationship is thriving as well. Even worked extensively with Walmart’s technology teams to implement and launch the application. Derric D’Souza, Senior Manager, Services Technology says, “Typically when you work with vendors, there is a little bit of time when vendors need time to understand what’s happening. In this case, it was super easy to work with them. The developers and the overall leadership with the fintech company were very synced. There was not a whole lot of managing that I had to do.” Sid Shake, Director, Services Engineering and Digital Acceleration added: “All the engineers we worked with at Even knew the tech stack really well. What usually would have taken two or two and a half weeks took about a day.”

Walmart’s Christmas Miracle

After 5 years of searching, Walmart executives applied their long time marketing motto to help their own employees “save money and live better”. And it turned out, it was just what they needed. Just as Walmart workers received that early Christmas pay app present in their benefit stocking December 17th, 2017, Walmart executives will be relaxing these holidays thoroughly satisfied, sipping their hot chocolate as they receive their ROI from their Santa named Jon Schlossberg and all his little developing elves. Although Christmas can’t be every day, at places like Walmart, Uber, and Mcdonalds at least payday can, and that happiness goes a long way.

Author: Bryton Wood, International Human Resources and Benefits Consultant, Symmetrical.ai