Some accounts say Roman soldiers were periodically paid for their labors in salt, and while compensation methods have evolved considerably since then, the concept of lump periodic payments has endured.
Numerous economic, social and technological trends are rendering this system more outdated, however. Consumers have come to expect on-demand service when they watch movies, make online purchases or hail rides, for example, but this practice contrasts with how most employees are paid. Workers typically wait two weeks or longer to receive their wages, which can be especially stressful for the nearly 60 percent of Americans living paycheck to paycheck.
Various compensation alternatives have recently emerged that are more aligned with workers’ on-demand expectations. Digital tools like pay cards and apps allow workers to receive earned wages the same day they request them. Interest in more flexible compensation methods was growing before the pandemic, and related economic shifts are likely to accelerate this trend as businesses seek to motivate employees as well as attract new talent.
On-Demand Pay And The Gig Economy
On-demand payment options are most prevalent among gig economy platforms known for offering on-demand services, including ridesharing and meal and grocery delivery. Ridesharing services Uber and Lyft were early pioneers in allowing drivers to instantly request their earnings, and such offerings have proven popular with workers on these platforms. This is especially true of Lyft, as more than half of its drivers reportedly use its daily payout option.
The pandemic-related economic fallout has hit the gig economy hard, but technology-oriented platforms have also demonstrated that they can adapt to rapid economic shifts. Instacart offers a compelling case study, as it has come to dominate the third-party grocery delivery market over the course of the pandemic partly because it brought online ordering to brick-and-mortar supermarkets that previously had limited capabilities. Instacart hired an estimated 500,000 “shoppers” amid the mass furloughs and layoffs many companies faced this spring, and it has offered on-demand payment options since 2019 to meet its gig workers’ demands.
On-demand pay appeals to gig workers for numerous reasons. Many have tight finances and often pay for their own supplies and equipment, including vehicles. PYMNTS research shows that those who are interested in receiving immediate or advanced payments most commonly cite two main benefits: reducing financial stress and being able to pay their bills. These options ar