Revolut introduces salary-advance feature in the UK
Fintech startup Revolut is launching a new feature called Payday. It is an alternative to credit card debt and short-term credit as it lets you unlock a portion of your wage early. If a business decides to integrate with Revolut, users can then access the feature from the financial super app directly.
Right now, the feature is limited to businesses based in the U.K., but the company plans to launch it in the European Economic Area and the U.S. as well. That's the trick - Payday isn't going to be available to everyone who receive their salary in their Revolut account through direct deposit.
Revolut has to plug into an employer's payroll system first so that the company knows how much employees are earning at any point in time. The fintech startup says that employers don't have to change their payroll system, though.
Once this is done, employees can unlock a portion of their earned pay whenever they want. Users can withdraw up to 50% of what they've earned in advance. While the feature is free for businesses, Revolut will charge a small, flat fee to users.
We believe in the importance of making financial wellbeing accessible to all, and this includes focusing on the impact of financial stability on employees' mental health," Revolut co-founder and CEO Nik Storonsky said in a statement. After the difficulties of the past year, the last thing employees need now is financial uncertainty and stress. It is important to move away from a situation where many are dependent on payday loans and expensive short-term credit, a reliance that is exacerbated by the monthly pay cycle.
People who live paycheck to paycheck could leverage Payday for unplanned expenses. For instance, if you have to fix your car and it cannot wait until the end of the month, you can unlock some money right away.
This isn't debt and doesn't affect your credit score - it's a portion of your salary, which means that you'll receive less money at the end of the month when you get paid.
Even if you're not using the salary-advance feature, Payday lets you see how much you've earned so far this month. It's going to be interesting to see whether a lot of companies adopt the feature. With millions of users in the U.K., chances are businesses are going to learn about Payday from their own employees.
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