Maybe a long time ago, but I get my pay which is supposed to be on the 1st and 15th on like the 13th and 29th or something. Getting paid "two days early" is a pretty common feature with Direct Deposit these days. It is always credited to my account before my actual paycheck technically gets posed.
> maybe charging a transaction fee
I imagine someone would be paying for the transaction of physically handling all the cash, no? Its not like having all the logistics of handling cash to potentially thousands of employees is a zero dollar cost. I imagine its massively cheaper for everyone to pay whatever marginal cost my employer is paying for ACH/DirectDeposit through their payroll app than paying a ton of people to handle and keep track of the cash.
Getting paid early is essentially an automatic "Payday loan" provided by whoever you bank with (whatever institution receives your payhecks) as a perk of banking with them. I personally decline this service, because I don't like adding a paycheck-sized liability to my accounting books for two days.
My bank seems to trust my paycheck deposits, though, and they "clear" (update my balance and become spendable) under 24hrs after they show up as "pending."
They're based on notification from they payroll company about the incoming paycheck. They're not just assumed by the bank to be there, and I'm not charged any interest on it, so I wouldn't necessarily lump them into the same category as "payday loans" which usually carry extremely high interest rates and often don't actually have any basis on truly knowing if the paycheck is incoming or not. Getting paid early is not similar to going to a payday loan vendor and getting a loan.
So when my bank is crediting my account with my paycheck early, its because my work told them I'm getting paid that amount. Otherwise they wouldn't necessarily know of the amount. Sure, its like some kind of loan in a way, but its essentially paperovering the slowness of the ACH to actually clear in a decent timeframe.
Direct Deposit. The banks can see the incoming transaction before the amounts clear. Payroll often starts the process two days early anyways since they try and get it to land on the 1st and 15th or whatever the dates are, so when the bank sees the incoming transaction it'll just automatically give me the funds while the clearing happens in the background.
Its honestly the same kind of logic they're using when you deposit your paycheck and it seems to clear turbo fast.
Maybe a long time ago, but I get my pay which is supposed to be on the 1st and 15th on like the 13th and 29th or something. Getting paid "two days early" is a pretty common feature with Direct Deposit these days. It is always credited to my account before my actual paycheck technically gets posed.
> maybe charging a transaction fee
I imagine someone would be paying for the transaction of physically handling all the cash, no? Its not like having all the logistics of handling cash to potentially thousands of employees is a zero dollar cost. I imagine its massively cheaper for everyone to pay whatever marginal cost my employer is paying for ACH/DirectDeposit through their payroll app than paying a ton of people to handle and keep track of the cash.