On-Demand Pay And Navigating Early Wage Access Laws And .

On-Demand Pay and Navigating EarlyWage Access Laws and Regulations1

SpeakerDallas WilfongDirector of Sales Eastern US2

Our focus for today Today’s Job Market Early Wage Accrual Next GenerationDisbursements Through Simple Plug-n-PlayIntegrations(s)3

Today’s Job Market

Unemployment rate falls to49-year low– CNN Business, Oct 2018The job market has tightenedto records not seen in nearlyhalf a centuryAmerica is running low onblue-collar workers– Yahoo Finance, Dec 20183.8%Unemployment55

And the workforce continuesto evolve, creating newchallenges for employers

Living Paycheck toPaycheck is a way oflife for majority of U.S.workersCareerBuilderSurvey Highlights:78% of U.S. workerslive paycheck to paycheck tomake ends meetNearly 3 in 4 workerssay they are in debt today - morethan half think they will always beMore than half ofminimum wage workerssay they have to work more than one jobto make ends meet77

The number of freelancers israpidly growing in the U.S.Key factors for growthAllow workers to decide when and forhow long to work along with incomediversificationTechnology reducing barriers to entryand enabling access to pay at the end ofa shiftNumber of U.S. FreelancersMillions57More people choosing to or wantingto freelance full-time (rather than on apart-time basis)55532014542015201620178Source: “Freelancing in America” study conducted by Edelman Intelligence (commissioned byUpwork and Freelancers Union, October 2018.8

Freelancers on track to outpacenon-freelancers by 202736% of thecurrent workforceare freelancers today10387MillionsDid you know?8353Almost half (47%)2017Freelancersof working millennials freelance2027Non-freelancersSource: “Freelancing in America” study conducted by Edelman Intelligence(commissioned by Upwork and Freelancers Union, September 2017.99

Millennials andGen Z are becomingthe workforceBy 2022, Millennials and Gen Z willrepresent 75% of the U.S. workforceHalf of them expect to leave theircurrent job within a yearMillennials were born from the early 1980s to early 2000s, and Generation Z works,born in the mid-1990s to the mid-2000s1010

Now there’s a way for you toReduce Payroll Costs whileoffering innovative PaymentBenefits to a changing workforce1111

Early Wage Accrual as aSolution for Retention andEgagement

UBER IntegratedEarly Access toAccrued Wages in2016Here’s what Uber drivers aresaying:“Instant Pay cannot get any easier. This featureallows the driver to have more control of theirfinances.”-Eric, Uber Driver“The Uber Debit Card is probably on of the bestthings that the company has done for drivers.”-Tony, Uber Driver13

SimplyPaid UberCase StudyRESULTSUber drivers stay more engaged by cashingout their earnings on-demand to theirexisting bank debit card or GoBank account. 100% electronic pay solution, even for theunbanked Majority of eligible drivers use Instant Pay Millions of instant payments paid out monthly Billions of dollars delivered14

There is a powerful inequality in workforce pay timingVS2 weeksInstantWorkers who wait for regular paycycles in a 9 to 5 jobThose who freelance and arepaid as they earn it15

Did you know?%40of Americans are not prepared to handlea 400 out-of-pocket emergency1Interest in receiving wages as instantpayments244% not living paycheck to48%paycheckpaycheck to paycheck andable to pay bills651 Federal Reserve Board, Economic Well-Being of U.S. Households report, May 2918, n 12,0002 PYMNTS.com Disbursements Satisfaction Index June 2018, n 2300%paycheck to paycheckand unable to pay bills16

Joe has an unplanned 300 expenseHe doesn’t have access to creditand won’t be paid for five daysJoe borrows 300 from a payday lender. Hepays back 300 plus 60 in fees in twoweeks, or rolls it over for an additional fee.If he is a typical payday loan user, heaccesses ten loans per year paying 600 in fees! His financial stress impactsjob productivity and satisfaction.Joe unlocks responsibleaccess to accruedwages when needed,because life doesn’twait for paydayJoe accesses his accrued wagesthrough early wage accrual access.He has instant funds with a nominaltransaction fee of 5.Joe does not miss a day of work,nor stress over the high cost debt trap.He enjoys saving 550 in fees.17

Current short-termcredit products arecostly and widely usedEarly Wage AccrualAccess Disrupts anExisting Market and is aHighly Desired EmployeeBenefitFees & Interest Paid1 50BU.S. Households withShort-Term Credit219MM1 Community Financial Services Association of America2 2016 Financially Underserved Market Size Study, Center for Financial Services Innovation1818

Wage Advance –Key Decisions“Key decision points when selectinga wage advance company are todetermine who will fund the advance ofwages and who will pay the fee toaccess funds early.”EmployerFundedProviderFundedEmployerPaid Employer Funded Provider Funded Employer Pays Fees Employer Pays FeesEmployeePaid Employer Funded Provider Funded Employee Pays Fees Employee Pays FeesKey Decision Points19

Did you know? Early Wage Accrual Empower employees to choose how they want to get paidwithout additional work for the corporate payroll office Implement a financial management tool that replacesexpensive alternatives such as payday loans, credit cardadvances, overdraft, or paying late fees Sway paper check hold outs to electronic payment to takeadvantage of the new benefit%25of employees would accesson-demand wage paymentsduring any given payroll100% Opt-in rate for payroll wageadvance for persons under 30 Deliver a benefit with no interest and no penalties2020

On-demand paymentis an elected benefitEmployers are providing part of the wages for a periodof days, so the process does not change employers’compliance responsibility or the wage cycle2121

Employer benefitsUnlock early wageaccrual to driverecruiting and retention,especially in a tight labor marketIncrease job applicants 30%Improve employee retention 20%Lower workforce absenteeism-40%2222

Best practice: How it worksCorporate payrolloffice requirementis only a daily fileinterfaceInterfaces with payrolland time/labor systems totrack and value accruedlabor, eliminating riskPolicies governaccess amountand frequencyEmployees accessaccrued wagesinstantly; via mobileapp, web or telephoneFunds are deductedfrom subsequentpayroll deposit23

Early wage accrualadditionalconsiderations Responsibility falls to the employer becausethe employer is contracting with a third partywho is providing the service on theemployer’s behalf. Is there a contract with the employer or athird party independent of the employer? If a third party is floating funds toemployees, is it stress tested? Are you offering pay choice with multipleways for employees to access their money? Are advances in the paystub or are theysubmitted and netted out and reported tothe employee2424

Known unknowns Products and demand are ahead of the regulations,so no defined case law or guidance from the LaborDepartment or Internal Revenue Service areavailable Federal and state regulatory guidance is sparse withregard to what on-demand pay is and to what extentsuch pay makes up wages, and how taxes, wage andhour requirements, and child support are handled2525

Known unknowns No industry norms appear to exist regarding theextent to which on-demand pay should be recordedon a wage payment stub On-demand providers are actively engaged with theIRS and states through the Labor Department, andthe agencies are willing to accept questions andopinions2626

Next Generation Disbursements& Payments

Today’s workers, particularlyyounger generations, expect to findmodern payment options that mirrorhow they move money in our digitalworld as part of the benefitspackage of prospective employers28

What are NextGeneration Payments? Fintech that enables payments to any debitaccount, along with tracking, reporting, andsecurity Work with current payroll cards or otherdisbursement vehicles Easy to send daily files, no complicatedintegration is required29

Financial Technology, nowadays better known under the term'fintech', describes a business that aims at providing financialservices by making use of software and modern technology.30

A disbursementsplatform made fortoday’s workforce Empowers employees to get paidHOW and WHEN they like Enables 100% electronic payments with fulldisbursement compliance and consenttracking for employers Drives employee engagement with early accessto accrued wages3131

Through Simple Plug-n-PlayIntegration(s)

Through Simple Plug-n-Play Integration(s)Next generation payments workseamlessly with existing payrollsystemsEmployers canelectronically pay 100% ofworkersWorkers can decide HOW and WHENthey want to receive their pay33

A DisbursementPlatform, Not aPayroll System34 Next generation payments aredisbursement platforms for payrolldelivery and complement payrollsystems and do not replace them The platform integrates withelectronic payroll systems toenable electronic disbursement offunds34

A single platform for employer payout needsEducationW2TravelExpensesOn-DemandPay of AccruedWages1099Missed Pay,CorrectionsBonusesTip PayIncentives35Termination

Compliance andConsumer Protectionis CriticalProtecting employees ultimately protects andelevates the businessProper payouts protect the business36

Compliance andConsumer Protectionis CriticalProtecting employees ultimately protects andelevates the businessConsumer and employee transparency is a regulatoryrequirement Tracking consumer, employee selection, and consentprotects the business and the bank Providing a banked option to the unbanked delivers valueto the community and is a goal of bank regulators37

Compliance andConsumer Protectionis CriticalProtecting employees ultimately protects andelevates the businessEmployee satisfaction is derived by delivering easysignup, choice, and a great user experience38

Compliance andConsumer Protectionis CriticalProtecting employees ultimately protects andelevates the businessExtensions to offer wage advance and daily tip payoutare important value-added opportunities39

Value to EmployersSave TimeSave MoneySave LaborDelight StaffFaster Payment Deliveries –Instant Cashless Tip Payoutat end of shift.Paperless cost savingsfor W-2 & 1099 workers.Efficient, instant handling of tips,term pay, and correctionsEasy integrationAvoid fees to execute paycorrectionsReduce risk with cashless, 100%digital instant payment of tipsFully paid tips at end ofshift to same account asdirect depositEfficiencies with single platformfor all payoutsPotential for later fundingof payroll, upon approvalSingle pay file for all payoutsFlexibility and choice inhow to be paid40

Questions?41

Thank you

2017 53 2027 87 103 83 Freelancers on track to outpace non-freelancers by 2027 are freelancers today 36% of the current workforce of working millennials freelance . Reduce Payroll Costs while offering innovative Payment Benefits to a changing workforce. Early W