PayActiv, Inc.
TypePrivate
Industry
Founded2012 (2012)
Founder
  • Safwan Shah (CEO)
  • Sohail Aslam (CTO)
  • Ijaz Anwar (COO)
HeadquartersSan Jose, California, U.S.A.
ServicesEarned wage access
Number of employees
200 (2020)
WebsiteOfficial website

PayActiv is a financial services company headquartered in San Jose, California. PayActiv partners with companies to provide employees with financial services such as earned wage access.[1]

Services

To receive earned but yet unpaid wages in the current pay period, employees can select from free options or pay an optional $2.99 fee.[2] The company links with payroll providers such as ADP, Paychex, and Paycor to provide early access wages to employees.[3][4] The service is mostly used by companies with lower income employees who work to paycheck-to-paycheck.[5]

Earned wage access is viewed as a responsible alternative to payday lending, as the service is offered without recourse, credit impacts, interest, or late fees.[6]

History

PayActiv was founded in 2012 by Safwan Shah, Sohail Aslam, and Ijaz Anwar.[7] In 2014, the company raised $4.3 million in funding.[8]

In 2017, Walmart introduced salary advances through PayActiv. As of 2019, an estimated 380,000 of Walmart's 1.4 million employees used the app regularly.[9]

In 2019, the company processed $2.5 billion in early wage payments.[10] That year, the company announced a partnership with Visa that would allow users to receive and spend paycheck advances through a prepaid Visa card.[11][12]

In 2019, PayActiv sponsored California Senate Bill 472, which would create a regulatory framework for earned wage access (EWA) providers in California.[13] The bill limited the transaction fees and the number of transactions that EWA programs could provide.[14]

PayActiv partnered with OnShift in March 2020 to provide early wage access to workers in healthcare and rehabilitation facilities during the COVID-19 pandemic.[15] In August, 2020 PayActiv raised $100 million in Series C funding, led by Eldridge Industries.[16]

In December 2020, the Consumer Financial Protection Bureau (CFPB) granted PayActiv sandbox approval to provide EWA. The CFPB ruled that Payactiv was not a traditional lender since its EWA program did not create debt, and as such was exempt from the Truth in Lending Act.[17]

As of 2021, the company had partnered with 1,500 employers, including Walmart, Wendy's, and Pizza Hut.[18][19]

References

  1. ↑ Balogh, Shannen (January 24, 2020). "These 5 paycheck-advance startups have attracted a big wave of VC funding. Here's a rundown of the fees they're charging to break you out of the 2-week pay cycle". Business Insider. Retrieved 2021-04-07.
  2. ↑ "Payactiv Program Pricing". www.payactiv.com/program-pricing/. 1 September 2023. Retrieved 1 September 2023.
  3. ↑ Kumar, Todd H. Baker and Snigdha (2018-05-13). "A Better Alternative to Payday Loans". Wall Street Journal. ISSN 0099-9660. Retrieved 2021-04-07.
  4. ↑ "PayActiv joins ADP as it takes on payday lenders". PaymentsSource. 2018-08-08. Retrieved 2021-04-07.
  5. ↑ "Do paycheck advance apps improve financial health?". American Banker. 2019-03-11. Retrieved 2021-04-07.
  6. ↑ "Home". Earned Wage Access. Retrieved 2023-09-01.
  7. ↑ "A Pakistani-American entrepreneur raised $100 million for his Fintech startup 'PayActiv.'". TechJuice. 2020-08-20. Retrieved 2021-04-07.
  8. ↑ Blattberg, Eric (2014-06-26). "Funding Daily: Big-money Thursday". VentureBeat. Retrieved 2021-04-07.
  9. ↑ Tergesen, Anne (2019-09-02). "Some Companies Offer a New Benefit: Payroll Advances and Loans". Wall Street Journal. ISSN 0099-9660. Retrieved 2021-04-07.
  10. ↑ Crossman, Penny (2020-03-20). "Consumers seek early access to wages to soften coronavirus hit". American Banker. Retrieved 2021-04-07.
  11. ↑ Isidore, Chris (2019-03-09). "Visa and PayActiv are now providing quicker pay for those who need it most - CNN Business". CNN. Retrieved 2021-04-07.
  12. ↑ Crossman, Penny (2019-03-11). "Do paycheck advance apps improve financial health?". American Banker. Retrieved 2021-04-07.
  13. ↑ "The derailment of California's payroll advance law". American Banker. 2019-09-20. Retrieved 2021-04-07.
  14. ↑ Opfer, Chris (August 1, 2019). "'Early Wage' Apps Aim to Disrupt Payday Loans, Two-Week Cycle". Bloomberg Law. Retrieved 2021-04-07.
  15. ↑ Vanac, Mary (March 3, 2021). "OnShift innovations enable workers access to wages before payday". Cleveland Business Journal. Retrieved 2021-04-07.
  16. ↑ Shen, Lucinda (August 17, 2020). "SoftBank lends WeWork $1.1 billion". Fortune. Retrieved 2021-04-07.
  17. ↑ Crossman, Penny (2020-12-30). "Synchrony, PayActiv join CFPB's compliance sandbox". American Banker. Retrieved 2021-04-07.
  18. ↑ Paoletta, Kyle; Nwanevu, Osita; Tharoor, Kanishk; Robins, James; Simons, Seth (2021-03-01). "The FinTech Industry Wants to Give Desperate Workers an Advance on Their Next Paycheck. It's a Trap". The New Republic. ISSN 0028-6583. Retrieved 2021-04-07.
  19. ↑ "U.S. Hourly Workers Push to Get Paid Sooner". Bloomberg.com. 2020-04-01. Retrieved 2021-04-07.
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