New scheme allows you to access your wage earlier – but experts have a warning

One company says it has the answer to meet unexpected bills by allowing you to access part of your pay early.

InstaPay is a service from Employment Hero, a platform that provides payroll services to around 200,000 small and medium businesses.

Part of the Swag app offered to employees of those businesses, it aims to overcome a reliance on short-term credit, payday lenders or buy now, pay later schemes.

Jessica Eady is, like many right now, struggling with unexpected bills.

Eady has turned to the service, which is offered by her employer’s payroll system, allowing her to withdraw part of her next pay in advance.

“Last month, all of my bills were due at once. So I had car rego, electricity, gas, insurance, water,” she said.

“Most people are living paycheck to paycheck and then to get a massive bill might not be an everyday expense but it’s a big one and trying to work out where you’re going to get that money from can be so stressful.”

Employees can withdraw no more than 50 per cent of their next pay – up to a maximum $250 a week – with a fee of around $3.

There’s no interest or late fees – but their next pay will be reduced by the advanced amount.

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Rob Dunn from Employment Hero said it can help people stay on track with their finances, rather than using costly services to get money.

“Taking out credit can really balloon those costs in the long run,” Dunn said.

“Having access to your own earned wage in advance can really help you to remove that reliance and make sure you can smooth out your own pay cycle.”

InstaPay isn’t the only wage advance product on the market and at a time when counsellors are seeing a surge in financial hardship, they warn such schemes can leave people in a debt trap.

Kirsty Robson from National Debt Helpline fears having early access to pay simply reinforces bad credit habits.

“It’s a constant cycle of having to access the wage advance products, pay them back, you can’t pay for rent because you have to pay them back, you access them again,” Robson said.

“If you’re accessing wage advance, then there almost always something else going on.

“No one needs to access their wage early if they’re not already in financial hardship.”

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