It isn’t a loan, it’s money you’ve already earned! Why you have to pay to access it?
Why do we have to wait for our salary one month? Why can't we access our money immediately, any time we want/need? Like.. music or movies?
When we want to listen the music we streamline it via Spotify, when we want to watch the movie, we streamline it via Netflix, when we want to watch a panda videos we... yes, we streamline it on YouTube. No waiting. Everything is available for us right now! Why can't we access our salaries in the same way?
Giving the starving man a diet book
I have to confess - was talking with couple of my friends about streamlined salary (salary which you can access every second) idea and a lot of them said that more important is to educate people how to manage money, then give them daily access to their resources. Well... not surpassingly...all of those people were from London or Warsaw/Poznan with earnings above average. For people who don't struggle with money it is sometimes difficult to understand how tough is to survive when you are short with funds in the middle of the month. And no, you didn't spend money on booze or another pair of shoes, you spend on rent, food, children's clothes. Necessities, which are hard to avoid.
As Safwan Shah from PayActiv said "If someone is living pay cheque to pay cheque, financial education is like giving a starving man a diet book”. That is not a solution, that is a cruelty. Even worse is, that our financial system is coming with "rescue" in shape of payday loans and credit cards which sometimes are more overpriced that a dinner in Central London. I would call that as it should be called - it is a robbery and should be illegal. That is why I am calling for a change! And I am not the only one.
Time to say NO.
"Earned wage access" tools are currently booming on the market. People realised how unfair it is to wait whole month for your own money, especially for blue-collars where liquidity is a crucial thing. That situation brought to market really unhealthy solutions like expensive payday loans, usury, black market loans, pawnshops. Credit cards are as well kind of derivative of the lack of access to your own money. And .. we have to pay high price to access money which we've already earned - how crazy it is! In the world of exponential innovation, we are still getting paid in old fashioned way.
Time to say NO.
Let's take a step back and try to understand why we have such an absurd situation.
Why companies pay us once a month?
In US the situation is slightly different, since a lot of people are paid on weekly basis, and some even on a daily basis, however, in most of the world, we are still receiving monthly payments. Why? First thing first - your Employer (Company where you work) wants to protect liquidity as well. No one likes to pay :(. And.. transfers are expensive. Banks charge for every transaction. Try to imagine that the Employer will have to pay 30 times more often if we will require daily payments instead monthly ones. Not mention about streaming where we should have transfers in milliseconds. Existing system is not ready for that. Is too slow, to expensive, to old-fashioned. And because of that we agreed on monthly salary and we pay the horrendous fees to access our money.
Time to say NO.
Old fashioned factoring
In a B2B world we have solution for delayed payments - called factoring. Yes, old, known factoring :). Solution which allow companies get access to their funds based on issued invoices. Mechanism with B2C is the same - simply our salary is the invoice. Why B2C factoring is not a common thing yet? I don't want to be pessimistic here - but "it's all about the money" and.. we simply let companies treat as like that.
Time to say NO.
How blockchain can change the way we are getting paid
Let's start from what is "Bitcoin streaming money". We can stream almost everything, so why we can't stream money? Let me use famous Obama quote:
YES WE CAN.
And this is the picture which I want to paint for you. The picture which shows that with blockchain we can have a millions of transactions, in milliseconds, and allow people access their money any time they want, from anywhere. Low fees, instant access, real time transactions, doesn't matter which currency (full globalisation). Looks like no brainer.
I don't know how exactly streamlined salary could look like since there is a lot of question marks both connected with a technology as well with mentality, but I know that in one shape of another, it will happen. And we will redefine salary, in the same way we redefined music or movies. And blockchain (or any other form of DLT which will evolve on it) is a technology which could make it happen.
And how the world is changing now?
We are not in a place where we can use Blockchain and digital currencies to have a proper streamlined salary YET, however the market goes into that direction, using different technologies since this is the market requirement.
Salary advance is one of the fastest growing segments in consumer finance today.
Number of players have come in the US/EU who provide such services in some shape or form.
The most recognisable names are
A lot of companies also pushing on loans against salary like:
Which looks exactly like factoring (loan against invoice).
Still, to get the advance against salary is positioned as a loan, and still it is quite expensive! And this is what is still unfair. Cheaper than short term lending, but still not fair. However, I believe it is the first step to more fair system and in a long term, financial freedom!