While the COVID pandemic has pushed a large swathe of American workers to increased financial struggles, it has helped some payday lenders emerge stronger than ever before. This is largely because of the less than ideal financial situation that the pandemic put much of America’s workforce at, leaving many with no choice but to look toward payday lenders to pay back their loans.
The payday lending model demands charging higher interest rates and fees for loans that pose a greater risk. However, the pandemic has prompted a reassessment of the economy as a whole. Despite all the financial perils that came with the pandemic, for a majority of Americans, the pre-pandemic era wasn’t too great either. More than 12 million Americans were taking out payday loans every year just to pay for basic necessities such as rent and utilities.
One of the reasons why Americans rely on payday loans lies in how and when they get paid. Usually, it takes a couple of weeks just to process the work conducted a day after the pay period, followed by another couple of weeks for the direct deposit to come through. For the millions of Americans who live paycheck-to-paycheck, payday loans are the only alternative available to help them cover their and their family’s basic needs.
This is the exact problem that Clair, a fintech startup from New York, is here to solve. Rather than loaning money out to Americans, it gives them free and instant access to earnings that they have already worked for, before payday.
Through a Clair Debit Mastercard, employees can withdraw their earnings instantly rather than going to a payday lender. One of the best features of Clair’s service is that it doesn’t cost employees anything. There is never any interest to pay, and Clair doesn’t charge anything for wage advances either. It is free-of-cost to employers as well, and it works through simple integration with workforce management and payroll systems.
So, how does Clair make money? They have a partnership with Mastercard through which they receive a percentage of the revenues that flow through Clair Debit Mastercards.
Clair’s services essentially eliminate the need for America’s workforce to rely on expensive payday loans or ask their employers for a pay advance. By giving America’s workforce direct access to cash that they have earned, Clair gives them the financial freedom to live a confident life.