Payroll Perspectives: Achieving a More Inclusive Financial System in the US with Fintech


In the U.S, money is becoming too tight to mention: A recent survey has shown that every third American is running out of funds before the paycheck day -due to the rising cost of living, with those earning less than $50,000 a year taking the biggest hit. 

To make ends meet, many turn to banks, friends, and family or ask their employers for early payments. Some, especially those with no access to banking services, fall into the hands of predatory lenders charging hefty fees — one of the main beneficiaries of the COVID-19 turmoil. 

Both financial uncertainty and unstable employment have forced many hard-working Americans to take loans with over 36% annual   interest rate, prompting some Congressmen to describe predatory lenders as those trapping “working-class communities like mine in cycles of debt.”


Predatory Payday Loans

With job layoffs and incomes down during the COVID-19 pandemic, even more Americans were forced to appeal to small-dollar solutions, such as Fig Loans or CashNetUSA, that provide fast cash often for sky-high interest rates.

“Debt collectors had a big year, and so did predatory lenders,” said Lauren Saunders, associate director at the National Consumer Law Center, to Bloomberg. The story gives an example of a 52-year-old disabled woman, who recently underwent cancer treatment, and borrowed $650 in August 2021. In just a few weeks, she saw her balance top $900 as interest started accumulating at a rate of 325%.

Yet there are worse conditions out there. According to the Center for Responsible Lending, a regular payday loan in Texas comes with a colossal 661% interest rate. The only states that offer some protection against the payday debt trap are Oregon, Virginia, Washington, and Maine that have the “modest” average rate ranging between 154%-391%.

Because of such predatory terms, borrowers often find themselves trapped in a vicious payday loan cycle. Three-fourths of all payday loans are taken out by people who have taken out 11 or more loans in a year, and most repeat loans are taken out within two weeks of repaying a previous one

Meanwhile, the services that provide access to quick funds are making big gains. According to Allied Market Research, the global payday loans market generated $32.48 billion in 2020, and is expected to reach $48.68 billion by 2030, growing at a CAGR of 4.2% from 2021 to 2030.

To help Americans get out of the debt trap and circumvent loan sharks, fintech apps, called cash or payroll advance services. They provide access to advance paycheck to unbanked Americans and those in financial need. And I am one of its creators. 

The Rise of Fintech Solutions

In 2021, we came up with B9, the AI-powered solution that offers interest-free and instant early access to one’s paycheck, to help the unbanked Americans feel more secure about their finances. 

We offer our clients to open a deposit account with the Social Security Number or the Individual Taxpayer Identification Number, order a B9 card, make payments, and get paychecks as early as 15 days in advance. 

Unlike predatory lenders, we only require a subscription of $9,99 per month and do not charge interest payment or any other fees needed to receive cash advance. Some other companies that also provide access to early paychecks include Dave and Earnin.

Within the $9,99 subscription the B9 provides essential benefits such as unlimited early access to paychecks; the instant no-extra-fee cash-out. In addition, the amount of the cash-out maxes keeps growing fast and can reach 100% of a paycheck.

With the economy slowly recovering from the ongoing COVID-19 ramifications, the demand for services that provide simple and effective financial solutions is likely to grow. And fintech companies are going to play a major role since they are the main providers of accessible banking services, attracting millions of Americans willing to avoid the predatory lending trap. And there are many of them: Ram Palaniappan, the founder of Earnin, once noted that providing money to people is a core pain point since over three-fourths of the country lives paycheck to paycheck. And I fully agree with him.

Anticipating the tightening competition, Deloitte underscores that many traditional financial companies have dramatically ramped up their own investments and transformation initiatives “to keep pace with the new breed of technology disruptors dominating most conversations about the industry’s future.”

Meanwhile, global consulting firms, Capgemini and Efma, state that fintech verticals “tallied double-digit growth in transaction volumes as 2020’s black swan event posed sector-wide challenges related to operational performance and financial risk”. The World Economic Forum and the World Bank also add that the fintech market witnessed an average year-to-year growth of around 19%. 

The success of fintech startups likewise proves that these services speak to both investors and customers. One of the oldest market players, Chime, has raised $2,6B, while Earnin secured $190M from multiple investors. The B9 app attracted a $5 million investment at the early stage and is now showing a three-fold growth. 

Although I am proud that B9 is a profitable business, ultimately the whole endeavor is not just about profitability. Social fairness is as important to us. By providing earlier access to paychecks, we are making the financial lives of hard-working Americans easier and are advancing America’s financial inclusive system as much as we can.

About the author

Brent Dixon is the owner of E-Crypto News and an early adopter of cryptocurrencies. He is a Book editor- that has edited numerous books on Cryptocurrencies. He has been a writer for more than 30 years. Covering everything from Jazz Music to Blockchain Technology. He currently lives with his wife on Miami Beach, Fl.

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