PayActiv

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]

PayActiv, Inc.

Company type	Private
Industry	Financial technology Financial services
Founded	2012; 12 years ago (2012)
Founder	Safwan Shah (CEO) Sohail Aslam (CTO) Ijaz Anwar (COO)
Headquarters	San Jose, California, U.S.A.
Services	Earned wage access
Number of employees	200 (2020)
Website	Official website

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.