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Launch HN: Payflow (YC S21) – Allow workers to access their wages instantly

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Re: Launch HN: Payflow (YC S21) – Allow workers to access their wages instantly

#61

Post by ceh123 »

seahawks78 wrote: post #57
hpkuarg wrote: post #55

Earlier quoted context omitted.

Yeah, $5k a month for "basic expenses" is beyond ridiculous.

I don't think it is especially if you are living in one of metro regions/tech hubs i.e. SF Bay area, Seattle, NYC etc.

Grad student stipend checking in. $21k/year in a large metro area (although not quite on the level of SF/NYC expensive). Median household income in my city is ~$100k/year.

Yes this is "enough" but no, it is not enough (especially after having worked and lived for a few years in a medium/low cost of living city).

That being said, $5k/month for "basic expenses" is definitely ridiculous. NYC/SF COL is like 30% more expensive than where I'm living, not a full 2.8x more expensive for basic expenses.

Edit: Also worth noting that in this context the $5k/month is spendable, so in SF for example this translates to about $82k/year pre-tax income, which according to the 2019 census is well above the median individual income of ~$52k.

Re: Launch HN: Payflow (YC S21) – Allow workers to access their wages instantly

#62

Post by curryst »

fcaballe wrote: post #35
qnsi wrote: post #30

I worked at a company that was working on this. I left because of ethical reasons. >Workers living from pay check to pay check have traditionally been vulnerable to exploitation And the proposed solution doesn't fix that. Most of those people don't have a problem with unexpected expense once a year. They don't budget and are short on cash every month. So now imagine Bob needs money halfway through the month. He takes…

Hey qnsi! I am leading BizDev at Payflow, I joined due to ethical reasons & social impact. Happen to be that I am southamerican and pretty familiar with people living paycheck to paycheck. The reason why they are better off is because we are the only alternative that is free for them: Credit cards, loans, etc are not zero-rate. Far from that a loanshark can charge up to 3000% for a short term loan in LATAM. We are br…

That doesn't really address the underlying issue that OP pointed out.

People that have infrequent issues where they need to juggle money around could use this. They could also simply save money, since the implication here is that they have enough money but not at the right time. This is a nice option for them to have, though. I would also expect people in this category to have access to non-exploitative methods of financing. If they don't have savings, they probably at least have assets for use as collateral in a loan to get the interest rate down.

For others, they have frequent issues where they have to juggle money around. Their problem is cash flow, not the timing. They're going to continue to fall behind on their bills. They get a $500 paycheck, and have $450 in bills. They need $250 to fix their car, so they take it out. When their paycheck comes, they get $250 and can't pay the other $200 in bills. The late fees on their $200 bill they can't pay are going to stack up to eat the $50/month they could have saved. They're still paying financial expenses, they're just in late fees instead of interest.

Re: Launch HN: Payflow (YC S21) – Allow workers to access their wages instantly

#63

Post by gruez »

seahawks78 wrote: post #57
hpkuarg wrote: post #55

Earlier quoted context omitted.

Yeah, $5k a month for "basic expenses" is beyond ridiculous.

I don't think it is especially if you are living in one of metro regions/tech hubs i.e. SF Bay area, Seattle, NYC etc.

The number itself as it pertains to cost of living isn't ridiculous, but the implied policy proposal of "let's give everyone $5000 so people in high CoL areas can cover their basic expenses!" is ridiculous. The #1 cause of high CoL in those areas is because it's a desirable place to live and there are more people who want to live there than there are housing units, so people bid up the price. Giving everyone $5000 wouldn't make it suddenly affordable, because everyone would just increase their bids by $5000, causing the situation to be the same.

Re: Launch HN: Payflow (YC S21) – Allow workers to access their wages instantly

#64

Post by sagarm »

antihero wrote: post #21

I mean, if workers are withdrawing money this month, which I presume is then taken off their wages next month, they are now in the hole, and even without interest, the problem just gets worse and worse, because then the next month they are more likely to withdraw early because they have less money. I do not know if this is financially responsible. How exactly will this prevent a horrific snowballing effect?

You could say the same about credit cards and their grace periods, but plenty of people are able to use those without incurring fees.

This product doesn't even seem to have the risk of generating fees directly.

Re: Launch HN: Payflow (YC S21) – Allow workers to access their wages instantly

#65

Post by pb7 »

seahawks78 wrote: post #57
hpkuarg wrote: post #55

Earlier quoted context omitted.

Yeah, $5k a month for "basic expenses" is beyond ridiculous.

I don't think it is especially if you are living in one of metro regions/tech hubs i.e. SF Bay area, Seattle, NYC etc.

Most people don't.

Re: Launch HN: Payflow (YC S21) – Allow workers to access their wages instantly

#66

Post by RhysU »

wutbrodo wrote: post #50
antihero wrote: post #22

Earlier quoted context omitted.

Most likely because people are desperate for money because they need to eat, and your app will create a snowballing effect where the next month, they are even more desperate because a chunk has been taken off their pay.

This doesn't make much sense. The counterfactual is that they'd be desperate to eat and take out a sky-high APR short-term loan. How is the new ability to take zero-interest loans "creating" the snowballing effect instead of reducing an already-existing one? This is called "the Copenhagen interpretation of ethics", in which any interaction with a situation in an attempt to improve it somehow gets warped into shoulder…

The payday loan puts backpressure on using it because it is obvious that the person is paying to use it.

A zero interest loan does not communicate to the user that they are reducing their optionality until they are stuck.

Re: Launch HN: Payflow (YC S21) – Allow workers to access their wages instantly

#67

Post by RhysU »

jkhdigital wrote: post #24
prepend wrote: post #23

Isn’t this problem more easily solved by more access to credit cards? It seems like the examples where an advance is needed would be more easily, and even cheaply, solved by using a credit card and repaying on payday. There are instant approval credit cards and low credit limit cards. And credit cards even allow cash advances at 20-30% annually. So, for the example with the gas station customer, using a credit card a…

The difference, I think, is that the credit card model is an unsecured loan while Payflow seems more like receivables financing. Big difference in the perceived risk exposure.

What happens when an employer goes bankrupt? Heck of a lot of correlated risk.

Re: Launch HN: Payflow (YC S21) – Allow workers to access their wages instantly

#68

Post by leetcrew »

curryst wrote: post #62
fcaballe wrote: post #35

Earlier quoted context omitted.

Hey qnsi! I am leading BizDev at Payflow, I joined due to ethical reasons & social impact. Happen to be that I am southamerican and pretty familiar with people living paycheck to paycheck. The reason why they are better off is because we are the only alternative that is free for them: Credit cards, loans, etc are not zero-rate. Far from that a loanshark can charge up to 3000% for a short term loan in LATAM. We are br…

That doesn't really address the underlying issue that OP pointed out. People that have infrequent issues where they need to juggle money around could use this. They could also simply save money, since the implication here is that they have enough money but not at the right time. This is a nice option for them to have, though. I would also expect people in this category to have access to non-exploitative methods of fi…

there's a third situation. suppose I spend roughly the same amount of money every month as I earn. on paper, this means that I should be treading water, at least. but my wages actually hit my bank account a week after the end of each pay period. in the worst case scenario, I won't see my first paycheck until about three weeks after my first day of work. at the very least, this cuts into my savings, but could leave me permanently in the hole as late fees stack up, even though my income matches my spending! a different version of this problem can occur in any month where paydays and bill due dates fall in the wrong sequence.

credit-worthy people can easily fix this issue with credit cards, which fix the paid-in-arrears issue, and also smooth out spiky intra-month cashflow. but I can see this product being very useful for people who can't get credit cards or don't feel responsible enough to use one.

Re: Launch HN: Payflow (YC S21) – Allow workers to access their wages instantly

#69

Post by gotostatement »

qnsi wrote: post #30

I worked at a company that was working on this. I left because of ethical reasons. >Workers living from pay check to pay check have traditionally been vulnerable to exploitation And the proposed solution doesn't fix that. Most of those people don't have a problem with unexpected expense once a year. They don't budget and are short on cash every month. So now imagine Bob needs money halfway through the month. He takes…

>And the proposed solution doesn't fix that. Most of those people don't have a problem with unexpected expense once a year. They don't budget and are short on cash every month. So now imagine Bob needs money halfway through the month. He takes out 50% of his pay. He uses is for immediate needs and than has to live at 50% of his pay for the next 1.5 month.

This is extremely paternalistic and shows how little you automatically think of someone who isn't paid a lot of money. You think that people who don't have money, their problem must be budgeting ("stop eating all that avocado toast!!"), so you need to slowly ration out their money "for their own good." Complete ideological BS.

Re: Launch HN: Payflow (YC S21) – Allow workers to access their wages instantly

#70

Post by throwawayboise »

gruez wrote: post #52
seahawks78 wrote: post #51

Earlier quoted context omitted.

We need universal basic income (UBI)! Period. I believe that in a country like US every working adult (18 - 64) should get a minimum of 5k a month for paying basic expenses. Furthermore, Payflow should be integrated with the government UBI program so that anyone can withdraw money against it similar to what is being done now. This will go a long way in solving the Payday problems/worker exploitation issues as mention…

>I believe that in a country like US every working adult (18 - 64) should get a minimum of 5k a month for paying basic expenses $5000? The median pre-tax income in the US is only $2854/month. https://www.ssa.gov/oact/cola/central.html

LOL yeah that "living wage" just keeps going up and up the more we're talking about it.

I don't even take home 5K/month and I'm a professional software dev. Granted the reason is I am maxing out every pre-tax savings plan I can (retirement, HSA, etc.) but the notion that a 22 year old couple should be getting 120k/yr for doing nothing is absurd.

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