Square seeks to give workers, employers faster cash access with new payroll features

September 15, 2020. Print article

said Tuesday that it is rolling out a pair of new features meant to expedite the payroll process, in an effort to help both employees and employers improve their cash flows amid the COVID-19 downturn.

The payment processing company said its employee-side feature, called On-Demand Pay, is available to workers who use its Cash App. The feature, Square said, lets employees get advances on their upcoming payroll of up to $200 whenever they want. 

Transfers to the app, the company said, result in automatic offsetting deductions when full payroll processing is done. Square also said On-Demand Pay will include fees for each transaction, which will be the lesser of 1% or $2.

In adding the feature, which Square said is now “available in 48 states,” the company stressed that it will help workers who face short-term financial hardship because of their waiting periods for their next paychecks.

“There are more than 80 million hourly workers across the country, many of whom regularly face cash flow constraints that are exacerbated by traditional biweekly and monthly pay schedules,” Square said, citing 2019 U.S. Census Bureau data that was released in April. “Now more than ever, it is critical that employees have access to safe and simple financial solutions that help them better manage their money.”

For employers, Square introduced a feature called Instant Payments. The company said the new feature, which is available to employers who use Square Payroll, will let them take sales proceeds that are stored in Square Balance and apply them to payroll.

Square compared Instant Payments to what it said is typically a multiday period for payroll.

“Traditionally, it takes up to four business days for payroll funds to move between an employer and their employees,” the company said. “This means business owners have to plan carefully in advance and forgo multiple days of valuable cash flow to run payroll on time.”

Employers who use the feature can also get funds out faster to workers who use Square Cash versus direct deposit, Square said.

“Team members and contractors who have elected to be paid via Cash App receive their pay within minutes, while those paid via direct deposit get their pay as soon as the next business day,” the company noted.

Square noted that the features are rolling out amid the economic downturn.

“The traditional payroll process is slow and rigid, creating cash flow constraints for employees and businesses alike. This is even more pronounced now given the current economic conditions,” Caroline Hollis, general manager of Square Payroll, said in a statement.