Wagestream's Josh Vernon and Brad Joffe talk to Australian Payroll Association CEO Tracy Angwin.
Recently Earnd CEO Josh Vernon and GM Brad Joffe sat down with Australian Payroll Association CEO Tracy Angwin to talk about payroll and how it can meaningfully impact employee financial wellbeing.
Here are some highlights from their conversation.
Tracy: You both probably don’t consider yourselves to be in the payroll industry, but tell me how you found yourselves involved in the payroll industry.
Josh: We started Earnd three years ago when a friend of mine got into a poor financial situation after using a payday loan. It’s quite shocking, there are about 782,000 payday loans taken out annually, which comes off the back of 46% of Aussies living pay cheque to pay cheque and ultimately one in three not being able to access $500 in an emergency. We got into payroll looking to solve this issue.
Tracy: Josh, I have to apologise. When I first met you I was extremely sceptical about Earnd’s offering and I think I made that quite clear. But since then I’ve had some education from you and others and I’ve seen lots of organisations joining your space and you see them on the back of buses, in ads during the Olympics, it’s quite extraordinary. As I understand it, these offerings are entirely different to Earnd. Can you explain why?
Josh: Any time we explain our offering it comes with a healthy level of scepticism because you are getting involved in people’s finances and that’s not always the most comfortable thing to do for employers — much like getting involved in mental health wasn’t the most comfortable thing to do 10 to 15 years ago. Earnd was founded together with five charities and is part of a body called the Financial Inclusion Action Plan, so deeply ingrained in our mission is to support financial wellbeing.
The offering we give to employers and employees is not just access to money that’s been earned and not yet paid, it’s also the ability to track earnings on a daily basis and compare the earnings to previous pay periods, to automatically save from your pay cheque, to learn positive financial behaviours and get 1:1 money coaching. The reason we started with being able to access your income as you earn it is that for many people it’s the most pressing need, they can’t start saving and embedding positive financial behaviours until they’ve reduced the impact of high-interest debt. For the people that can’t access $500, earned wage access is there for them to help them avoid having to go to more predatory providers.
Because we work hand-in-hand with payroll we know exactly how much someone has earned at any point in time. Then we cap the amount they can withdraw at 50% of their income and charge a simple flat fee which is often covered by employers.
So if you take out $1,000 with us the most it would cost you is $2.49, whereas with the direct to consumer providers it’s likely to be $50. That’s quite a meaningful difference.
Tracy: I’ve always been a massive advocate of employers providing financial tools and education as part of their wellbeing program. It’s great to have everything all connected. The only place that I ever learned things like that was from my mother. She would talk about being young and having fishing tackle boxes and having a sixpence in one for the rent and a sixpence in another for something else so that whenever a bill came she knew she had the money to pay it.
Brad: You’re one of the lucky ones. Not everyone has someone to help them with managing their money and show them the right things to do. It’s almost a generational issue. If your parents or friends aren’t good at managing money they can teach you those bad habits. Then you’re not taught anything different at school or university. Even though money is such an integral part of our lives we’re not taught how to access it or use it.
Tracy: For me, I think Earnd is a great benefit for an employer to provide. What feedback do you get from employers and employees?
Brad: A lot of the employers that we work with like to include Earnd on their job ads as a financial wellbeing program. We did a study with indeed.com and saw that job postings that mentioned Earnd actually filled 27% quicker than job postings that didn’t mention Earnd - these were pretty much like for like postings.
Tracy: There’s such a war for talent at the moment.
Brad: Exactly and the problem at the moment is you’ve got hospitality and retail companies fighting for talent with other companies outside of their sectors because there are so many people out there looking for talent.
Then there’s the retention piece as well. So if I’ve got the ability to access my pay when I need it at Hungry Jack’s or Pizza Hut and I’m thinking about moving jobs, I’m less likely to do that if I can’t get the same level of support at another organisation. The data we’re seeing shows that Earnd can have quite a big impact on retention. One of our customers in WA has increased their retention by 30-40% which is amazing.
The other point is on the shift filling side. If I know I’m going to be able to access my money straight away for doing an extra shift, then I’m more likely to pick up another shift. Especially if I’m using the Track feature and see my earnings for the fortnight are behind my average earnings.
Tracy: Where do you see this space going?
Josh: I think we have an opportunity to fundamentally change how financial services are delivered. We’re now working with 750,000 employees across the globe at some amazing organisations. But there’s such a long way to go in terms of recognising financial health as part of overall wellbeing, much like mental health is now. We’re excited to be at the beginning of the journey.