Rethinking The Way We Get Paid

How the 2-week pay cycle is hurting you and what we are doing about it

Welcome to the Circlepay Newsletter. This is our very first article.

So let us kick things off with an important question — and one that goes to the heart of what we do:

Why do we wait 2 weeks (or longer) to get paid?

Have you ever wondered that?

Maybe not.

‘That’s just the way it needs to be done’, you might be thinking.

But here’s the thing…

Your salary and wages are earned before payday — by the hour if you’re on a wage. Once it’s earned, it’s your money.

But for some reason, we don’t get our pay when we earn it. Instead, we are told to wait 2 weeks before we even see 1 cent of it.

Meanwhile…

Employers benefit from this arrangement

When your employer delays paying you for 2 weeks, they get to keep and use your money to fund other parts of their business.

Put another way: it’s almost the same as you lending money to your employer for 2 weeks and deciding not to charge them anything for the service (how very generous of you!).

We say almost the same, because where it differs in practice is that it’s not you who decides the terms of this “loan” to your employer — it’s your employer who makes that decision for you (‘I’m just going to take that loan for free, thanks’).

So now that we know your unpaid earnings is in fact a free loan to your employer, why then would they want to give this up? The simple answer is they wouldn’t…and they haven’t.

If this sounds like a raw deal for you, it is.

But it gets worse…

Here comes the debt spiral

Sometimes, and more frequently than we’d like to admit, our budgeting goes out the door. We encounter an unexpected expense (e.g. a medical bill, car repairs or even a last-minute wedding gift) and that sets off a domino effect.

First off — we run out of money before payday.

So where do we find the extra money to cover our costs?

Maybe it’s a loan from family or friends, which isn’t ideal for a whole raft of reasons (but that’s another story).

More often than not, our options come down to:

1. Rack up the credit card (if you have one)— hoping and praying that we can pay it back in time before the bank starts charging us interest (around 20% or higher) or smacks us in the face with late fees (which they conveniently fail to remind us about before it’s too late); or

2. Take out a short-term loan — paying through the nose in fees — 20% establishment fee (WTF!) and 4% monthly fees until the loan is paid back. That’s not even including a bunch of other fees (e.g. rescheduling, late or account arrears fees) that you could get hit with if you fall behind on payments.

So to access the funds we need (to cover our costs), we are forced to fork out a lot more costs, which then negatively impacts our cashflow for the next pay period. This makes it even harder to stay on top of our regular expenses, which can lead us to run out of money again before payday.

We then end up repeating the whole process all over again!

This is called a debt spiral. And it keeps us from moving forward in life.

All the while, your money is just sitting there, inside your employer’s bank account —inaccessible to you — trapped in your employer’s fortnightly pay cycle.

So everybody wins…oh except you

The banks / loan providers collect their sky-high fees and interest revenue and your employer gets their free 2-week loan compliments of your hard-earned wages.

You? You get lumped with a big pile of debt, fees and interest charges.

And for what? For simply being unable to access the money that you were rightfully entitled to in the first place.

That’s just not fair and frankly really messed up.

This is why we decided to do something about it.

Circlepay is born

At Circlepay, we believe in the fundamental right of every individual to access their money as and when they’ve earned it. After all, it is your money!

We also believe that excessive fees and interest charges are crippling everyday Australians and are an unfair burden on our society.

We’re a team of finance and IT professionals who are dedicated to harnessing the power of technology to help people achieve financial freedom in their lives.

Our first product is an app that helps you access up to $200 of your earnings each pay period. We don’t charge interest. We don’t charge late fees. We only request a flat dollar fee of $4.95 per $100 cashout to keep our service going.

Our app is currently in private beta but we are working hard to open up as soon as possible.

If you believe in what we are doing and want to stay up to date with developments, subscribe to this Newsletter.

If you would like to join our early access waitlist for the app, register your mobile number at circlepay.me.