On Demand Payment – What Is It & How It Works

Here’s how it this payment service typically works:

1. Business Integration: The employer partners with a payroll service provider that knows how to use on-demand payment systems, or implements an in-house solution. The payment system is integrated with the employer’s payroll and time-tracking systems to accurately calculate the earned wages.

1. Employee Registration: Employees who wish to use on demand payment services register with the provider or opt into the program through the employer. They create an account and provide the necessary information for payment processing.

1. Time Tracking: As employees work, their hours are tracked using the employer’s time-tracking system. This data is securely transmitted to the on demand pay system, which calculates the earned wages based on the completed hours.

1. Payment Request: When an employee needs access to their earned wages before the regular payday, they can request an instant payment through the on demand pay platform. This can typically be done through a mobile app or online portal.

1. Verification & Approval: The on demand payment system verifies the employee’s eligibility and the amount of earned wages available for withdrawal. Once approved, the requested amount is transferred to the employee’s bank account or provided on a prepaid card.

1. Repayment: On the regular payday, the employer or payroll service provider deducts the amount of the on demand payment from the employee’s upcoming paycheck, ensuring that there is no double payment for the same period of work.