Digital and contactless payment methods have risen in popularity and use, yet many workers still receive at least a portion of their income via cash or paper check.1 This gap places a burden on segments of the workforce that must “digitize” their checks or cash to transact in an increasingly digital world.
At the height of the pandemic’s second wave, Netspend surveyed more than 1,000 full-time, part-time and gig workers and more than 500 employers across a variety of industries to understand the impact of COVID-19 on today’s workforce.
This research uncovered how the digital gap is impacting the workforce and how businesses can respond to changing workforce dynamics to help financially stressed workers, and in turn, help themselves. Staffing firms and employers can learn from three core findings to rebuild toward profitable growth — while paving a path to financial stability for the workforce.2
Digital Payments Make Better Use of Worker and Employer Time
Of those workers that Netspend surveyed, more than one-third reported receiving some portion of their income via cash or paper check.3 For these individuals, bridging the gap from cash or checks to digital, contactless transactions has been challenging, time consuming and costly — or sometimes not possible.
The time spent “digitizing” funds can often take the place of budgeting or other activities that could improve their financial situation. In fact, 54% of employees being paid by cash or check find it difficult to keep track of their spending (versus only 27% of digitally paid workers).4
Digital payments are also making it easier for employers to pay their workers more consistently and reliably, according to 61% of the employers surveyed.5 Going digital has streamlined the payroll process for 58% of employer respondents.6
Remote Work Presents Opportunities to Save Costs and Close the Digital Access Gap
As employers adapted to the new normal, this presented opportunities to eliminate costs, better support workers and close digital access gaps. Pivoting to digital wage payments or offering early access to earned wages helped firms to adapt payments as-needed, reduce or eliminate the costly logistical challenges of paper payments and close the digital access gap for workers.7
There are significant cost savings of relying on digital, contactless payment solutions. Research shows it costs businesses up to $2 to cut and process a check, versus 35 cents or less for direct deposits.8 Based on these metrics, a business with just 100 employees could save at least $7,000 per year by simply opting for direct deposit over paper checks.
How You Pay Your Workforce Impacts Hiring, Retention and Performance
Employee turnover is expensive, at about one-third of each employees’ annual earnings. But employees that are financially stable are much more likely to remain with their current employer for the next year compared to those who are financially unstable.9
Financial insecurity has caused nearly one-third (31%) of the surveyed individuals to quit a job, whereas 17% have lost a job for this reason. And 27% reported they’d leave a job for an option to get paid digitally without needing to have a bank account.10
Early access to earned wages is shown to decrease financial stress and help users pay their bills on time, while reducing employee turnover and increasing job applicants. In fact, 77% of surveyed workers reported they are interested in early access to earned wages; 37% of workers would switch jobs for this option.11
Digital access can also lead to higher performers — 52% of those paid digitally strongly agreed that their last performance review was positive, whereas only 38% of those paid by cash or check could say the same.12
Staffing firms (and employers) can reap measurable, bottom line benefits by digitizing wages and making it possible for workers to transact more efficiently in today’s digital economy, regardless of banking status.
To see more data about the digital access gap, download the ebook.
1. Netspend, “Power of the Pivot: Embracing Three Major Pandemic-Driven Trends,” April 2021 https://www2.e4.netspend.com/l/533722/2021-04-09/h4ygm4, Page 2
2. Netspend, “Power of the Pivot: Embracing Three Major Pandemic-Driven Trends,” April 2021 https://www2.e4.netspend.com/l/533722/2021-04-09/h4ygm4
3. Netspend, “Power of the Pivot: Embracing Three Major Pandemic-Driven Trends,” April 2021 https://www2.e4.netspend.com/l/533722/2021-04-09/h4ygm4, Page 3
4. Netspend, “Power of the Pivot: Embracing Three Major Pandemic-Driven Trends,” April 2021 https://www2.e4.netspend.com/l/533722/2021-04-09/h4ygm4, Page 3
5. Netspend, “Power of the Pivot: Embracing Three Major Pandemic-Driven Trends,” April 2021 https://www2.e4.netspend.com/l/533722/2021-04-09/h4ygm4, Page 3
6. DailyPay, “What Is Earned Wage Access?” https://www.dailypay.com/blog/what-is-earned-wage-access/
7. DailyPay, “What Is Earned Wage Access?” https://www.dailypay.com/blog/what-is-earned-wage-access/
8. DailyPay, “How Much Are Paper Checks Costing Your Business?” https://www.dailypay.com/blog/cost-of-paper-checks/
9. Netspend, “Power of the Pivot: Embracing Three Major Pandemic-Driven Trends,” April 2021 https://www2.e4.netspend.com/l/533722/2021-04-09/h4ygm4, Page 6
10. Netspend, “Power of the Pivot: Embracing Three Major Pandemic-Driven Trends,” April 2021 https://www2.e4.netspend.com/l/533722/2021-04-09/h4ygm4, Page 5
11. Netspend, “Power of the Pivot: Embracing Three Major Pandemic-Driven Trends,” April 2021 https://www2.e4.netspend.com/l/533722/2021-04-09/h4ygm4, Page 4
12. Netspend, “Power of the Pivot: Embracing Three Major Pandemic-Driven Trends,” April 2021 https://www2.e4.netspend.com/l/533722/2021-04-09/h4ygm4, Page 5
