Targeting payday lenders, Branch adds pay-on-demand functionality for hourly workers – TechCrunch
Branch, the scheduling and payroll management app for hourly workers, has added a new on-demand payment service called Pay, which is now available to anyone who downloads the Branch app.
It is an attempt to provide a paid alternative to payday loans, where borrowers charge exorbitant rates to lenders on short term loans or cash advances. Borrowers can often end up paying between 200% and over 3000% on short term payday loans.
The Pay service, which was previously only available to certain users from a waitlist at companies like Dunkin ‘, Taco Bell and Target (who are Branch customers), is now available to anyone with United States and gives anyone the option of being paid for the hours worked during a given pay period.
Branch, which began its business life as Branch Messenger, began as a shift planning and management tool for large retailers, restaurants, and other businesses with hourly workers. When the company added a payroll tracking service, it began to gain a better understanding of the financially precarious lives of its users, according to chief executive Atif Siddiqi.
“We thought that if we could give them part of their salary up front, it would be a big advantage for their productivity,” Siddiqi said.
The company works with Plaid, the fintech unicorn that debuted five years ago at the TechCrunch Disrupt New York Hackathon, and Cross River Bank, the stealthy financial services provider that backs nearly every major fintech player in America.
“The opening of Pay and instant access to income to all branch users continues our mission to create tools that empower the hourly employee and allow their professional life to meet the demands of their personal life,” said Siddiqi said in a statement. “Our initial users have embraced this functionality and we look forward to bringing Pay to all of our organic users to better engage employees and increase staffing more effectively.”
Beta users of the Pay service have already averaged about 5.5 transactions per month and shift coverage rates more than 20% higher than non-users, according to the company. Payroll isn’t technically a loan service. It offers a free two-day payment option for users to receive wages earned but not collected before a scheduled payday.
For users, there is no integration with a back-end payroll system. Anyone who wants to use Pay just needs to download the Branch app and enter their employer, debit card or payroll card and bank account (if a user has one). Through its integration with Plaid, Branch has access to nearly every bank and credit union in the United States.
“A lot of these employees at some of these companies are unbanked, so they’re paid on a payroll card,” Siddiqi said. “This has been a big differentiator for us in the market, allowing us to give unbanked users access to the salaries they earn. “
Users of the app can instantly get a cash advance of $ 150 and up to $ 500 per pay period, according to the company. The Pay service also comes with a salary tracker so employees can forecast their earnings based on their current schedule and salary, a shift planning tool for taking extra shifts and an overdraft security feature to suspend refund withdrawals if this causes users to overdraw their accounts.
Branch charges nothing for users who are willing to wait two days to receive their money and charges $ 3.99 for instant deposits.
Siddiqi sees the service as a leading product to bring users to the Branch app and ultimately more business customers to its SaaS payment planning and management platform.
“The way we generate income goes through our other modules. It’s very sticky… and our other modules complement this concept of Pay, ”says Siddiqi. “By combining planning and compensation, we are providing high rates of shift coverage… now people want to take unwanted shifts because they can be instantly paid for those shifts. “