PayActiv is a financial services company headquartered in

San Jose, California San Jose, officially San José (; ; ), is a major city in the U.S. state of California that is the cultural, financial, and political center of Silicon Valley and largest city in Northern California by both population and area. With a 2020 popul ...

. PayActiv partners with companies to provide employees with financial services such as earned wage access.

Services

To receive a cash advance for their unpaid wages in the current pay period, employees pay a $5 fee. The company links with payroll providers such as ADP,

Paychex Paychex, Inc. is an American provider of human resource, payroll, and benefits outsourcing services for small- to medium-sized businesses. With headquarters in Rochester, New York, the company has more than 100 offices serving approximately 6 ...

and

Kronos Incorporated Kronos Incorporated was an American multinational workforce management and human capital management cloud provider headquartered in Lowell, Massachusetts, United States, which employed more than 6,000 people worldwide. In February 2020, the compa ...

to provide early access wages to employees. The service is mostly used by companies with lower income employees who work to paycheck-to-paycheck.

Criticism

In October 2020, the New York Times noted that the $5 fee PayActiv charges could be equivalent to over a 365% APR which is comparable to the rates charged by some payday lenders.

History

PayActiv was founded in 2012 by Safwan Shah, Sohail Aslam, and Ijaz Anwar. In 2014, the company raised $4.3 million in funding. In 2017,

Walmart Walmart Inc. (; formerly Wal-Mart Stores, Inc.) is an American multinational retail corporation that operates a chain of hypermarkets (also called supercenters), discount department stores, and grocery stores from the United States, headquarter ...

introduced salary advances through PayActiv. As of 2019, an estimated 380,000 of Walmart's 1.4 million employees used the app regularly. In 2019, the company processed $2.5 billion in early wage payments. That year, the company announced a partnership with

Visa Visa most commonly refers to: *Visa Inc., a US multinational financial and payment cards company ** Visa Debit card issued by the above company ** Visa Electron, a debit card ** Visa Plus, an interbank network *Travel visa, a document that allows ...

that would allow users to receive and spend paycheck advances through a prepaid Visa card. In 2019, PayActiv sponsored California Senate Bill 472, which would create a regulatory framework for earned wage access (EWA) providers in California. The bill limited the transaction fees and the number of transactions that EWA programs could provide. In January 2020, David Reldy was appointed as the company's first Chief Legal Officer. PayActiv partnered with OnShift in March 2020 to provide early wage access to workers in healthcare and rehabilitation facilities during the

COVID-19 pandemic The COVID-19 pandemic, also known as the coronavirus pandemic, is an ongoing global pandemic of coronavirus disease 2019 (COVID-19) caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The novel virus was first identif ...

. In August, 2020 PayActiv raised $100 million in Series C funding, led by

Eldridge Industries Eldridge Industries LLC is an American holding company headquartered in Greenwich, Connecticut, with offices in New York City, London, and Beverly Hills. Eldridge makes investments in various industries including insurance, asset management, techn ...

. In December 2020, the

Consumer Financial Protection Bureau The Consumer Financial Protection Bureau (CFPB) is an agency of the United States government responsible for consumer protection in the financial sector. CFPB's jurisdiction includes banks, credit unions, securities firms, payday lenders, mortg ...

(CPFB) granted PayActiv sandbox approval to provide Early Wage Access (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 The Truth in Lending Act (TILA) of 1968 is a United States federal law designed to promote the informed use of consumer credit, by requiring disclosures about its terms and cost to standardize the manner in which costs associated with borrowing ...

. As of 2021, the company had partnered with 1,500 employers, including

Wendy's Wendy's is an American international fast food restaurant chain founded by Dave Thomas (1932–2002) on November 15, 1969, in Columbus, Ohio. Its headquarters moved to Dublin, Ohio, on January 29, 2006. As of December 31, 2018, Wendy's was the ...

, and

Pizza Hut Pizza Hut is an American multinational restaurant chain and international franchise founded in 1958 in Wichita, Kansas by Dan and Frank Carney. They serve their signature pan pizza and other dishes including pasta, breadsticks and dessert at d ...

. In March 2021, PayActiv partnered with

Hancock Whitney Hancock Whitney Corp. is a bank holding company headquartered in Gulfport, Mississippi. It operates 237 branches in Mississippi, Alabama, Florida, Louisiana, and Texas. The bank is the official bank of the New Orleans Saints and issues the offici ...

to offer earned wage access to bank clients.

References

{{Reflist Financial services companies based in California Financial technology companies Financial services companies established in 2012 Payday loan companies