78% of full-time working Americans live paycheck to paycheck. Between pay cycles, people with no savings rely on overdraft, payday loans, or credit cards to cover emergency expenses.

Earned wage access (EWA) is a growing market that provides employees access to their accrued wages before the end of their payroll cycle.

Tapcheck’s focus on distribution through payroll and employer partnerships and strong founding team with decades of experience in the HR and payroll space put it in a strong position to continue to grow in the EWA market.

Market Overview

Individuals reach out to a variety of sources to pay for an unexpected expense

Earned wage access allows employees to tap into their income as they earn it rather than waiting for a traditional payday.

For individuals: Earned wage access provides them with an alternative to payday loans or credit cards which charge excessive interest rates and often push borrowers into debt traps.

For companies: Earned wage access can improve employee retention and help companies attract more applicants for open positions. EWA providers are critical because it is not easy for employers to migrate their back-office payroll workflows, which have operated on a scheduled basis for years, to support on-demand wages.

There are two primary EWA products:

Employer Provided: Offered as an employee benefit through an employer. It can be employer-funded, where the employer covers the cost of wage advances, or employee-funded, where employees cover the costs directly.

Direct to Consumer: Employees with confirmed employment can access earned wage advances directly without the involvement of the employer.

Tapcheck Product 

Tapcheck is an on-demand pay solution providing employees instant access to their earned wages. The company mission is to “improve business performance by empowering employees with financial wellness”.

Tapcheck partners with employers to enable them to provide instant payouts to their employees. McDonald’s, Jack in the Box and Home Instead are among hundreds of employers that use Tapcheck’s service.

Small businesses often struggle to access EWA solutions due to limited cash flow and a lack of comprehensive payroll integrations that are essential for accurate EWA forecasting. To address this, Tapcheck has developed a flexible solution that caters to a wide range of businesses and their employees.

Tapcheck integrates with more than 100 systems, including ADP, Paychex, and Paylocity, ensuring high accuracy. After linking with an employer's existing payroll system, Tapcheck leverages the most recent payroll data to determine an employee's expected earnings. Employees then have the option to access their pay for a minimal fee — similar to those from an ATMs — with no additional cost to the employer.

Tapcheck monetizes in two primary ways:

1. Charging ATM-like fees to employees for advancing wages early.

2. Earning interchange fees when employees use Tapcheck's debit card.

Growth

In its Series A announcement in June 2022, the company announced it had grown 10 times year over year.

Team

Tapcheck was founded by husband and wife team Ron and Kayling Gaver to help employees nationwide access earned wages before payday. They saw that cash advances could help the 61% of Americans living paycheck to paycheck.

As CEO, Ron brings 14 years of experience running a real estate development firm. He ensures Tapcheck stays focused on its mission of financial freedom as it grows.

As COO, Kayling brings deep HR and payroll expertise from 18 years in the industry and the ability to combine tech and on-demand pay to empower financial control. Her operational experience drives Tapcheck's growth and innovative solutions.

The Market

The opportunity ahead is large, with a total addressable market (TAM) of $26B in the United States. This includes over 131 million people earning less than $75K annually, over 78 million hourly wage workers, and 12 million people drawing on payday loans once a year.

Competition

The earned wage access space in U.S. has several well-funded competitors with varying business models.

Rain: Rain, which raised $116 million in debt and equity funding in March 2023, enables employers to offer workers on-demand pay or earned wage access. Rain’s service is free for employers who provide it to their employees as a voluntary benefit. Over 500,000 employees across industries currently use Rain.

DailyPay: DailyPay, which raised $260 million between a revolving credit facility capacity and new term loan funding in January 2023, provides employees real-time access to earned wages. It is focused on building on its on-demand payroll offering and expanding internationally.

Clair: Clair, which raised $175 million in debt and equity in July 2023, provides immediate, free earned wage advances to workers by integrating with existing HR platforms. It serves both full-time and gig employees, offering online tools or workers to make sense of their finances and ask for an earned wage advance.

Tailwinds 

Tapcheck plays into three growing trends:

Employee competition and retention: A tighter and more competitive job market leads employers to focus more on retention and recruitment. According to a recent Harris poll, 81% of workers would take a job with an employer that provides free access to on-demand wages over an employer who does not.

Flexible work and pay: The growing gig economy is increasing demand for flexible pay options as more workers take on side jobs and work arrangements that do not align with traditional pay cycles. This is pressuring traditional employers to provide more frequent access to earned income to compete.

Employee Productivity: Reduce employee stress and worry that comes with financial costs like late fees, overdraft charges, and high-interest loan expenses.

Headwinds

Tapcheck faces two key sources of risk.

Competition: Intense competition both from well funded wage access startups like DailyPay and Rain, as well as established fintechs with large user bases that have released wage access features

Regulation: Unclear regulations around consumer protections for earned wage access products create uncertainties around compliance and legal obligations.

How Tapcheck wins

EWA providers sell a relatively undifferentiated product. Differentiation in this space is driven by distribution.

Distribution: It is critical to focus on distribution through partnerships with payroll providers and employers. This is particularly important since EWA is a relatively sticky product with a long sales cycle.

Cross sell: Leverage EWA as an entry point to cross-sell other offerings, either to employers or employees to improve monetization. This could include additional financial products to employees, such as loans, savings accounts, insurance etc or additional HR tech products to employers.

Market expansion: Sectors with large blue-collar workforces are ideal targets for EWA startups as they tend to pay hourly or weekly, making early wage access more useful. But there is an opportunity to extend beyond low-income workers into middle class employers, who also face occasional cash flow shortfalls when unexpected expenses arise.

International Expansion: Emerging markets have an even greater proportion of the population living paycheck to paycheck.

Education: It is important to clearly communicate the unique value to each stakeholder group to drive trust.

Tapcheck is well positioned to be the bank for America's workforce. With comprehensive payroll integrations across 100+ systems, Tapcheck has the capability to extend its early wage access across various sectors. It can then leverage this unified access to cross-sell additional financial products, as it has successfully demonstrated with its debit card product. Additionally, Tapcheck's educational product, which offers a wide range of financial education tools, further positions it to build trust and engage users effectively.

All in all, Tapcheck’s deep partnerships, extensive integrations, strong GTM approach, and education focus serve as strong moats against well-funded competitors in a large and growing market.