Square Inc. (NYSE:SQ) is allowing small business employees to receive their wages ahead of time with the launch of an “instant Payment” and On-Demand Pay” features, thus boosting its booming banking business.
Employees to receive up to $200 ahead of the payment schedule
The company launched the “On-Demand Pay” feature, which allows those that use Square for Payroll to give their employees a paycheck of up to $200 ahead of their biweekly schedule. The funds can be channeled into the mobile account, the Cash App. This new feature leveraging the Cash App and Seller ecosystems, is a huge milestone that will offer employees and employers control and flexibility over their cash. Some of the employees will have the option of transferring their on-demand payment to a debit card that is linked for a fee of 1% per transfer
Square has also launched the instant payment feature, which allows enterprises to fund their Payroll using their balance in Square where sales they process are stored rather than waiting for the payment to go via external bank accounts. The expansion of the functionality of an employer’s balance and enabling sellers to select is as a source of payment. Square will receive a confirmation of payroll funds and initiate payouts to employees immediately. Those using Cash App can receive payment instantly whole those that receive payment through direct deposit get their money the following day.
Square solving cash flow problem
Caroline Hollis, the company’s general manager of Payroll, indicated that the decline of cash tips at restaurants was the reason for launching the products. She indicated that since cash is becoming a potential germ-spreader massive amount of money is being moved digitally. Hollis indicated that they want to solve the cash flow, especially for those that used to work in restaurants where cash tips were part of their wages.
The products will incentivize users from signing up for direct deposits through the Cash App. Those who will opt to receive payment through Square mobile accounts will have it easier than looking for their accounts and routing number information.
