Deepa Subramanian
Deepa Subramanian, CFO, DailyPay

In a landmark move that signals both maturity and momentum for the On-Demand Pay sector, DailyPay has become the first provider in its space to complete a securitisation of Asset Backed Securities (ABS), effectively creating a brand new asset class. At the heart of this financial milestone is DailyPay's Chief Financial Officer, Deepa Subramanian, who discusses the strategic thinking behind the transaction, what it means for the company's rapid expansion, and how it reflects growing institutional confidence in On-Demand Pay as a mainstream employee benefit.

With over 1,000 employer clients and a platform that has facilitated $25 billion in payments in 2024 alone, DailyPay's innovative approach continues to reshape how employees access their earnings—offering greater financial flexibility while helping employers retain and engage talent in a highly competitive labour market.

1. Tell us about how DailyPay became the first On-Demand Pay provider to secure issuance of a securitisation of Asset Backed Securities (ABS), thus creating a brand new asset class.

By offering DailyPay as a benefit, employers have a seamless, efficient way to recruit and retain workers, and employees can break the rigidity of the paycheque-to-paycheque cycle. This transaction is an important step in supporting our mission to power daily opportunities by providing employers with solutions to create a more engaged and productive workforce and by empowering employees to live a better financial life.

Since launching in 2017, our On-Demand Pay product has seen significant adoption. As of year-end, we now serve more than 1,000 employer clients and can reach over 5 million of their employees, and facilitated over $25 billion in payments in 2024.

Our growth over the years has been driven in part by our ability to provide the funding that enables employers to offer On-Demand Pay as a benefit to their employees, while avoiding the complexity of navigating compliance issues, liquidity constraints, or payroll disruptions.

We've consistently developed innovative ways to fund On-Demand Pay transfers, and at this stage, the combination of our significant scale, proven model, and growing industry awareness made an asset-backed securitisation a logical next step. With all our funding structures, both past and present, including this securitisation, we're proud to create value for everyone involved: Our investors, employer clients, and most importantly, the employees we support.

DailyPay has a strong track record of driving innovation in the On-Demand Pay category, and our pioneering securitisation in the On-Demand Pay space is another example of that commitment. These types of industry-level innovations have, in our view, positioned us as the market leader and category eponym for on-demand pay and financial wellness solutions, and made us the provider of choice for clients of all sizes - from Fortune 500 organisations to SMBs, across a number of different end-markets.

2. What does this securitisation mean for DailyPay's business?

This securitisation will support our growth by enabling us to deliver the benefits of On-Demand Pay to even more employees, helping them manage their earnings, plan and spend more effectively, and ultimately feel more in control of their financial obligations. It expands and diversifies the capital sources DailyPay uses to deliver its On-Demand Pay offering, while optimizing our overall funding structure.

3. Why are financial institutions supporting DailyPay in this capacity? What does this say about the growing On-Demand Pay industry as a whole?

We are pleased to issue the inaugural securitisation for our industry and it reinforces that On-Demand Pay is becoming an increasingly important benefit that employers are choosing to offer their employees.

For DailyPay, we believe the successful completion of this transaction validates our differentiated B2B2C business model, which leverages direct integration with HR technology systems to seamlessly deliver On-Demand Pay at scale. This approach has resulted in a consistent track record of negligible operational losses on the transfers, creating an attractive financial profile for investors.

4. What financial institutions were behind the securitisation?

  • Barclays acted as lead bookrunner and structuring agent, with Citi and Morgan Stanley serving as joint bookrunners
  • Over 20 institutional investors participated in our inaugural ABS transaction

5. How big is DailyPay's credit facility? How is the capital used?

In 2022, we established an asset-backed lending facility with several financial institutions to fund On-Demand Pay transfers. Since its inception, we have successfully expanded the facility nine times, bringing its total size to $760 million. The new $200 million securitisation will complement our existing $760 million facility and further support the growing scale of our platform.

6. What is DailyPay's business model?

DailyPay disrupts the way employees get paid by offering On-Demand Pay, giving employees access to up to 100% of their net earned pay at any time between payroll cycles. In addition to On-Demand Pay, DailyPay provides employees a range of financial wellness resources, including the DailyPay Card, a prepaid debit card.

Our business model is unique, serving a business-to-business-to-consumer (B2B2C) ecosystem to deliver a suite of benefits to employers and ultimately, their employees. We go to market by first building relationships with employers, who then offer our platform to their employees. Once implemented, we work closely with our employer clients to drive employee adoption of our platform by raising awareness of the platform's features and benefits.

One aspect that differentiates our platform is our direct integration with an employer's various HR technology providers, including their payroll and time and attendance systems, which gives DailyPay real-time access to data and full visibility into each employee's net earned pay. This integration enables us to offer on-demand access of up to 100% of net earned pay at any time between payroll cycles and to automatically disburse the remaining balance to the employee's preferred account on their regular payday, without requiring any changes to the employer's payroll processes.

Employees have several options to access their earned pay. They can choose a fee-free next-day transfer to a bank account of their choice, a fee-free instant transfer to the DailyPay Card, or an instant transfer to a bank account of their choice for a transparent, nominal fee of $3.49.

The value proposition of our business model is demonstrated by our scale. As of December 31, 2024 we have partnered with more than 1,100 employer clients, reach over 5 million employees who can access our platform and, on average, we have seen about 1-in-3 eligible employees enroll in the DailyPay platform.

7. Why is DailyPay relevant in today's economy?

Today's job market offers several alternatives beyond traditional employment models, including gig-economy and freelance work, which are becoming increasingly attractive given flexibility and quicker access to earned pay. At the same time, employees are increasingly dissatisfied with traditional employer compensation pay cycles that do not align with their ongoing financial obligations. While most employees are paid biweekly or monthly, their living expenses, including rent, utilities, and credit card and loan payments, typically follow a different cadence. Many services today are instantaneous—except for the one needed for daily living—a paycheque.

DailyPay helps employers modernise their relationship with their employees by giving them a way to offer workers what they want and need: Real-time access to their own earned money. By offering DailyPay as a benefit, employers have a seamless, efficient way to recruit, retain, and engage workers, and employees can break the rigidity of the paycheque-to-paycheque cycle.

For employers, we deliver our highly valued platform at no cost, providing benefits that can play a critical role in influencing an employee's decision to accept a job offer and remain with that employer. Employers have realised measurable improvements in business outcomes by adopting the DailyPay platform, including a 30% reduction in turnover rates, according to a study we commissioned in 2023.

By granting employees access to their earned money when they need it and providing tools to optimise their income, we are helping them maximize their time, achieve financial stability, and ultimately, become happier and more productive at work. On average, our solution has helped frequent overdrafters save about $660 (£481) each year in overdraft and other fees, and over 60% of DailyPay users have reported a decrease in credit card interest charges. Additionally, 55% of employees who use our platform take on one or more additional shifts each month, thanks to this increased visibility and control over their pay.

8. What does the future hold for DailyPay?

DailyPay launched in 2017 with the goal of delivering a comprehensive, enterprise-grade platform that gives employees access to On-Demand Pay. Since then, our platform has expanded beyond our flagship On-Demand Pay product to include a broad suite of employee-focused financial wellness solutions. Today, we believe we are a market leader and category eponym for On-Demand Pay and financial wellness solutions. We know our platform resonates with employees and employers alike, and we remain committed to growing our user base and expanding our products to continuously enhance our offering.

While we've made significant strides over the past few years by making our platform available to more than 1,100 employer clients with over five million employees as of year-end 2024, we're still just scratching the surface, with an estimated 130 million US workers earning less than $200,000 (£145,637) who could benefit from our solution. Our successful ABS issuance will play an important role in supporting our increasing scale as we pursue our mission to power daily opportunities by providing employers with solutions that create a more engaged and productive workforce and by empowering employees to live a better financial life.