Tate Hackert spent most of his teenage years working on fishing boats in Vancouver, Canada, pocketing the surprisingly impressive earnings he made into his savings. By the age of 16, he had saved enough money to take out a second mortgage for a friend who needed it but couldn’t afford one for himself.
Hackert quickly realized that he was able to help more people who have been through difficult times – That’s what he did. Between the ages of 16 and 23, he lent around $300,000 in small, short-term loans to clients he found online. Within an hour of posting a Craigslist ad, Hackert reportedly received more than 300 emails from people asking for $1,000 to $2,000 to get them through the month.
“I started to realize that for these people who are living paycheck to paycheck, the only real options they had were these huge, short-term, small-dollar loans or just taking a late bill payment and a hit to their credit,” he says, “I thought to myself, ‘there has to be a better way’.”
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Hackert turned his high school side gig into a full-fledged business, co-founding ZayZoon in 2016, a fintech company that gives employees access to earned wages as a voluntary benefit.
“Fast forward several years and ZayZoon has helped access earned wages,” says Hackert. “This concept of giving employees the ability to unlock salaries they’ve earned but haven’t yet been paid.”
ZayZoon is an employer-sponsored benefit that companies can add to their HR and payroll systems. Employees have access to up to 50% of their next monthly or semi-monthly salary instantly, for a low fee or sometimes for free. As a result, the 300 small and medium businesses ZayZoon works with have seen a 29% decrease in employee turnover and a 79% increase in recruitment, according to company data.
“We always thought of ZayZoon as a tool that could help increase workforce productivity — we didn’t necessarily think of it in terms of retention and recruitment,” says Hackert. “But employers now see the need for a differentiating benefit, to offer the employee flexibility so they don’t walk across the street for an extra 25 cents an hour or access to compensation that can help this employee to go through a difficult time.”
According to a recent survey conducted by DailyPay, a financial services company, 78% of users said access to their paycheck helped them pay their bills on time and avoid late or overdraft fees. Seventy-four percent said access to their earned salary helped reduce their financial stress, and 70% of users said access to their earned salary helped them avoid taking out a payday loan.
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More and more employers are starting to recognize that they play a role in the financial well-being of their employees, said Hackert. But giving employees a raise is not necessarily easy in this market, and even more difficult for small or medium-sized businesses. That’s why they look for any perks that can add value to their offering and show employees they care.
“It’s not just employees of big companies,” says Hackert. “We see it in on-demand or part-time work, they also have the option of being paid on demand. And from my perspective, that’s going to accelerate even further.”
But if it is so beneficial for employees and employers, what prevents employers from standardizing it?
“The biggest concern or the biggest objection that [we hear] when talking to an employer really comes down to the work involved – they assume there’s going to be a really big boost,” says Hackert. “But we’ve cut the onboarding time from what can take weeks or months to businesses thirty minutes away.”
The lift may be small but the payoff is big, according to Hackert. He recalls a situation where an employee was able to access the first half of his next paycheck online at the store when he realized he would need more funds for groceries.
“It’s not just a product used by customers who don’t have or don’t make a lot of money,” says Hackert. “Whether you’re making $35,000 a year or $135,000 a year, if you don’t budget properly, your bills can catch up with you. It’s a solution for everyone.”