Earned wage access providers are unlocking the growth potential with gift cards in 2023

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In the current macroeconomic environment, where inflation is eating into the disposable income of many worldwide, earned wage access programs are emerging in growing popularity. For those leaving paycheck to paycheck, earned wage access programs offer a convenient way to access funds, as and when needed. Consequently, providers are expecting a strong growth in customer acquisition over the next few quarters, as inflation continues to reduce the value of their monthly earnings.

While the demand for earned wage access programs is expected to grow significantly in 2023, the associated fee can dampen the growth prospect for providers going forward. Most of the earned wage access providers charge users US$3 to US$5 each time they ask for instant access to earned income ahead of their payday. This fee can add up quickly if the users tap into the program frequently. It means that the value of their earning is reduced further due to frequent usage of such services.

To provide their users with an instant payout option, while also preserving the earned dollar value for them, earned wage access providers are leveraging gift cards as a free-fee payment method.

• ZayZoon, an earned wage access provider for small and medium-sized businesses, has expanded its real-time payment options with the introduction of Instant Gift Cards. The payment solution, introduced in March 2023, is aimed at supporting the employees who are reeling under the impact of rising inflation and subsequent surge in product prices. Consequently, the addition of fee-free gift cards to its payment options is expected to further bolster its presence in the earned wage access market going forward in 2023.

ZayZoon has partnered with hundreds of retailers in the United States. These include some of the big names such as Amazon, Walmart, and DoorDash. With the introduction of the new feature, employees using ZayZoon can withdraw a part or all of their earned wages into a gift card that also comes with a bonus amount of up to 25%. CVS, for instance, is offering a 7% bonus on top of the earned wages. The bonus amount is made available immediately to the employee through Boost mobile service offered by ZayZoon.

For employees, worried about rising inflation and product prices, the introduction of a gift card payout option will make the wages go further, thereby allowing them to save money on essentials like groceries. Like many other earned wages access providers, ZayZoon also charges a US$5 fee every time, when the users opt for receiving wages on their debit cards. Consequently, PayNXT360 expects the fee-free gift card option to boost the appeal of using earned wages access program offered by ZayZoon, instead of alternative credit options such as buy now pay later schemes.

Half of the users enrolled with ZayZoon are using the earned wages access program to meet short-term necessities. This, coupled with the fact that most Americans are living paycheck to paycheck, ZayZoon is well poised to record accelerated growth on the back of its fee-free gift card payout option.

• In April 2023, ZayZoon also launched a fee-free gas card that offers a 5% bonus for employees that are reeling under the pressure of rising energy prices. This product will enable the employees to further stretch their dollars on gas. Over the next few quarters, PayNXT360 expects the firm to launch more such products catering to the needs of its users. Furthermore, ZayZoon is also expected to partner with more merchants, thereby allowing users to choose from a range of retailer gift cards in the United States. 

Going forward, PayNXT360 also expects more earned wage access providers to innovate with their service offerings with the aim to deliver more value to their users amid the current macroeconomic environment. With gift cards emerging as a convenient solution, more providers are expected to integrate the payment solution to diversify the payout options for users.

This, coupled with the fact that earned wage access providers are expected to garner increasing traction among hourly and full-time employees due to higher inflation, the gift card industry will also benefit significantly from the short to medium-term perspective. As the demand for accessing earned wages before the payday continues to grow, PayNXT360 expects the integration of earned wage access programs with gift cards to drive the gross merchandise value in the global gift card market over the next five years.

To know more and gain a deeper understanding of the United States gift card market, click here.