Proponents of advance-pay services point to the cycles of poverty and debt that lower-wage workers can get trapped in when they turn to payday lenders for financial help between paychecks. (Photo: Shutterstock)
A Minneapolis startup has joined the pay-advance app field, at a time when workers who live paycheck to paycheck are finding such apps very appealing and much easier to work with than old-school payday lenders.
Branch was founded in Los Angeles n 2015 but moved to Minneapolis a year later to work with Target and other companies in the Twin Cities area. The company received $10 million in venture funding in 2017, and has grown from three employees to 50.
In a Minneapolis Star Tribune article, company founder and CEO Atif Siddiqi lauded the Twin Cities for the support that startup companies can find there. He also noted the incubator and accelerator programs available to startups and other small companies in the area, along with the availability of skilled workers.
As an app, Branch was first focused on helping employees access work schedules across devices. The app gave workers the flexibility to switch hours through a digital interface.
More recently, the company introduced a pay advance feature, which allows workers to collect pay on a daily basis, rather than waiting until their paycheck is issued. The system deducts the amount needed from the worker's paycheck via a debit card. With the Branch system, workers can access up to $150 daily and $500 a pay period.
This flexibility in pay structure has been experimented with by other companies such as Even and Payactiv. Many such services are available at low or no cost to workers. In the case of Branch, employers pay a fee per employee for use of the app.
Proponents of such services point to the cycles of poverty and debt that lower-wage workers can get trapped in when they turn to payday lenders for financial help between paychecks.
Employers have embraced the idea because it results in a more dependable workforce, less stress among employees, and improved worker loyalty. With a tightening employment market, these types of digital services can help with recruitment and retention.
The Branch app was a finalist in this week's interaction Innovation Awards, being held in Austin Texas as part of South by Southwest.
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