BNZ funds program to offer workers an alternative to payday lenders


BNZ chief executive Angela Mentis said the PayNow program could prevent some vulnerable workers from falling into the clutches of payday lenders.

Provided

BNZ chief executive Angela Mentis said the PayNow program could prevent some vulnerable workers from falling into the clutches of payday lenders.

BNZ provides interest-free, cost-free funding for a payroll program that cash-strapped workers can use to get paid sooner.

The bank’s chief executive, Angela Mentis, hoped it would provide an alternative to loan sharks for financially vulnerable workers.

The PayNow program was developed by the listed fintech NZX Paysauce, and will be available to approximately 20,000 employees whose payroll is managed by Paysauce.

But Paysauce co-founder Asantha Wijeyeratne said the number of covered employees will increase as Paysauce grows, and the company is ready to let rival payroll companies use PayNow to distribute benefits.

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The PayNow system allowed employees to be paid before payday for work they had already done, Wijeyeratne said.

That would mean people who had to pay a bill before payday could avoid having to borrow from a high-interest lender, he said.

Te Kaea

The government is targeting “predatory” loan sharks and truck stores with tougher measures to keep people out of debt.

“For many people, PayNow will make the difference between paying for basic items such as food, clothing and education with their own money, rather than high interest loans between paychecks,” Mentis said.

The PayNow service had been around for some time, but relied on individual companies agreeing to make payments to workers before payday, and not all companies had the cash to do so, or were not willing to. do it, said Wijeyeratne.

BNZ’s funding has made it possible to extend PayNow to employees of all of Paysauce’s 3,300 client companies, he said.

Asantha Wijeyeratne, co-founder of Paysauce, says the growth of short-term lenders is not a source of pride for the country.

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Asantha Wijeyeratne, co-founder of Paysauce, says the growth of short-term lenders is not a source of pride for the country.

There was a long tradition that companies paid desperate workers early, if they ran into financial difficulties, but it was an ad hoc system, Wijeyeratne said.

“It’s a very difficult conversation for someone to say, ‘Sorry, my car has broken down and I need it to get to work. Could you lend me $ 250? ”Said Wijeyeratne.

The idea of ​​allowing workers to be paid earlier for work they had already done challenged traditional notions of the pay cycle, Wijeyeratne said.

“We’re all so used to convenience and freedom as consumers, but payroll still operates on an outdated model,” he said.

“It seems obvious that it should be possible for employees to access their own money when they need it, without resorting to high interest lenders who exploit.”

BNZ has a growing history in the nonprofit funding of social finance projects, including funding for Good Loans, Habitat for Humanity and The Good Shop.

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