| Hey qnsi! I am leading BizDev at Payflow, I joined due to ethical reasons & social impact. Happen to be that I am southamerican and pretty familiar with people living paycheck to paycheck. The reason why they are better off is because we are the only alternative that is free for them:
Credit cards, loans, etc are not zero-rate. Far from that a loanshark can charge up to 3000% for a short term loan in LATAM. We are bringing employers into the game, to actually do something and pay so that their employees get the zero-rate that is so popular for high income workers through their cards or banks. What reduces your purchasing power is financial expenses, not accessing your money earlier. We won't solve every money problem, but at least we are solving some and reducing low income workers exposure to predatory finance. Hope you appreciate my answer, it was 100% sincere.
Fede :) |
People that have infrequent issues where they need to juggle money around could use this. They could also simply save money, since the implication here is that they have enough money but not at the right time. This is a nice option for them to have, though. I would also expect people in this category to have access to non-exploitative methods of financing. If they don't have savings, they probably at least have assets for use as collateral in a loan to get the interest rate down.
For others, they have frequent issues where they have to juggle money around. Their problem is cash flow, not the timing. They're going to continue to fall behind on their bills. They get a $500 paycheck, and have $450 in bills. They need $250 to fix their car, so they take it out. When their paycheck comes, they get $250 and can't pay the other $200 in bills. The late fees on their $200 bill they can't pay are going to stack up to eat the $50/month they could have saved. They're still paying financial expenses, they're just in late fees instead of interest.