Why I joined PayActiv
I am excited to join the Advisory Board of PayActiv. This journey, however, was first embarked upon five years ago.
I met Safwan, the Founder and CEO of PayActiv, in the spring of 2014 when I was Senior Advisor to the Director at the Consumer Financial Protection Bureau (CFPB). PayActiv is one of the first companies that developed the earned wage access model, or EWA, to help financially struggling American workers fight predatory lending, overdraft and late fees, that wreak havoc on their already fragile financial lives. The EWA concept is so incredibly simple yet powerful: one can choose to get paid as soon as the work is completed. Waiting for two weeks to get paid is like providing an interest free loan to your employer while you are forced to borrow at a triple-digit APR or incur a $35 overdraft fee. Almost 80% of Americans are now living paycheck to paycheck. Not to mention 40% of Americans cannot cover a $400 emergency expense. A mild financial shock, such as a car breakdown, could push a middle-class family into a high-cost debt trap that is difficult to climb out of. By unlocking the earned-but-yet-to-be-paid wages, consumers now have a “new source” of funding to tackle such emergencies without having to borrow new debt. EWA has proved to be an effective tool to smooth out income and expense volatility.
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When Safwan explained to me this business model in our first encounter, I saw not only the typical risk-taking entrepreneurial drive in a Silicon Valley innovator, but also a passion to change the world for the better.
“This is the kind of innovation this country needs. And we should do our part to allow them to prosper,” I said to myself. We bonded after our very first meeting out of mutual appreciation and a common goal to leverage technology to better serve the underserved.
That was the very early days of PayActiv when almost everyone was writing them off, from VCs on the West coast to policymakers in Washington D.C. Fast forward five years to today, PayActiv is now serving the country’s largest employer — Walmart, and the EWA model has finally won mainstream recognition.
EWA has gained its hard-earned legitimacy and is at an inflection point. Copycats are popping up, some great, some so-so, and some potentially harmful. We need to work harder to ensure this young industry would not be overtaken by greed. I worked as a policymaker to guide this industry to where it is today. I join PayActiv to continue to help lead this transformation for a better tomorrow.
