This startup allows workers to access earned wages early

Jason Lee, DailyPay Founder & CEO joins the Yahoo Finance Live panel with the latest on the on-demand pay platform.

Video transcript

ZACK GUZMAN: Welcome back to Yahoo Finance Live. In today's startup spotlight, we're taking a look at the intense battle that businesses are currently finding themselves in for talent. As a refresher, right now, we're sitting on what is a record amount of job openings here in the US. When we look at that, in a very intense battle to fill those openings and entice workers. Employers are not just upping what their employees are paid, but how they are paid with flexible new services.

And one of those services, DailyPay, lets users tap paychecks in real time so they don't have to wait for payday to roll around. The company just closed a $175 million series D funding round. And for more on that, happy to welcome into our starting spotlight segment here, DailyPay's founder and CEO Jason Lee joins us right now. And Jason, congrats on the round. Good to be chatting with you here. You work with some big names-- McDonald's, Kroger, and some other ones out there. But what are you seeing in terms of those companies and others trying to use your services to attract new talent?

JASON LEE: Sure, well, Zack, thanks for having me today. Super appreciative that you've had me on here. Maybe just by way of background, DailyPay is the New York-based technology company. And we build software. We work with enterprises, Fortune 500 companies in just about every industry that you can imagine. And very simply, we enable their employees to control the timing of when they get paid.

What we've been able to determine is based on our research, something like one out of every two, call it 53% of current job seekers are actually looking for a job that pays daily. And that should be no surprise kind of emerging from COVID. And so, as we work with the largest enterprises in the country, what we've determined is that offering an on-demand pay benefit is highly differentiated in terms of their ability to attract, retain, and recruit great talent.

AKIKO FUJITA: I wonder if you could break that down, Jason, on what that means in terms of the extent of the cash drain on Americans who are using your platform right now. I mean, you talk about just how many people are living paycheck to paycheck. I mean, it's not even that, it sounds like. It's really just day to day.

JASON LEE: Yeah, I mean, look, there's a lot of research out there. But I think one of the stats that we look a lot at is something like 70% of current working Americans are, in fact, living paycheck to paycheck. And so, when you think about that dynamic and just how disruptive that is for a worker who may have already earned wages, they may have already worked a certain period of time, and how disruptive it might be that they are then just waiting day by day, week by week, to get that final paycheck, you know, that can mean the difference between paying a $35 overdraft, perhaps being evicted, not being able to make rent.

All of a sudden, if you leveraged technology to be able to have someone access what we call their pay balance, truly the amount of net wages that they're earning minute to minute, well, that radically changes the employee experience and, in turn, changes the employer's ability to create the best experience for that employee.

ZACK GUZMAN: Yeah, let's get into how it works, too, though, right? Because obviously you guys got to make some money here in doing this. And you got some people out there who might say, all right, if you've got an employee who's living paycheck to paycheck, maybe charging them to tap that paycheck a little bit earlier sounds similar to maybe payday loans and gets into a territory that they might not like. But at the same time, I mean, the fees here are $1.25 to $2.99 if I'm getting that right. Talk to me about how it works in letting employees tap that paycheck.

JASON LEE: Sure, well, look, here's the value that we've built over the last five years. Creating this pay balance, believe it or not, is actually really, really difficult. What we had to build was a massive technology platform that incorporates, number one, millions of data points in the HR landscape. Number two, we bring to that data a unique and proprietary funding model. All the payments that we make are funded off of our balance sheet. Zack, you would raise the funding round we just completed. We also tacked on $325 million of debt. This company raised a half a billion dollars in order to provide this service to as many Americans as we can.

And then, third, we connect into the banking system so that consumers can access this instantly. From a fee perspective, think of it a little bit like an ATM machine. If you go to an ATM machine and take out $100 out of your checking account, well, we all know that money is yours. That's your money. It sits in your checking account. And perhaps you might pay a few dollars to access that money and to receive those funds via an ATM machine. And in the same way, that's how we think about the pay balance. That is your money. We, through our technology platform, have now made that come alive. We've made it accessible. And so you pay a few dollars to be able to access that as well.

ZACK GUZMAN: Yeah, it's very interesting, and added flexibility and time where flexibility is very important for a lot of people, especially if they are kind of in those paycheck to paycheck moments and trying to navigate all of these unknowns. But Jason Lee, DailyPay's founder and CEO, appreciate you coming on here to explain it and give us a little bit more detail there. Thanks again.