Businessman on a mission to destroy payday lenders

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Andrew Barnes, Managing Director of the nation's largest trust company, Perpetual Guardian, and Chairman of PaySauce.

PROVIDED

Andrew Barnes, Managing Director of the nation’s largest trust company, Perpetual Guardian, and Chairman of PaySauce.

Businessman Andrew Barnes is on a mission to eradicate payday loans.

And he wants the payroll companies to help him.

“Personally, I want to kill him,” Barnes said of the desperate lending industry, in which loan interest rates can be north of 500 percent.

Barnes’ plan of attack is to create payroll systems for businesses that allow employers to release pay earlier when an employee is in financial need for work they’ve already done.

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He is the president of PaySauce, a payroll systems software company, which has launched a feature aimed at breaking what he calls the “payroll poverty cycle” by allowing employees to access their income early. .

Payday loans sell well because cash-strapped workers can borrow until payday to overcome a cash shortage.

But Barnes believes the business model is the result of an outdated monthly or fortnightly payroll cycle.

Payday <a class=loans can plunge borrowers into a tragic debt spiral.” style=”width:100%;display:inline-block”/>

DAN KITWOOD / GETTY IMAGES

Payday loans can plunge borrowers into a tragic debt spiral.

As an alternative, PaySauce now allows employers to grant their employees interest-free access to the money they have already earned as soon as they earn it.

“Employers can now offer their employees the option of taking an interest-free advance on their next salary,” Barnes said.

They will pay a flat fee of $ 3 for the service, but this could reduce the demand for payday loans.

Barnes opposes New Zealand’s culture of easy debt, including the rise of programs like Afterpay, which encourage people to buy now and pay later.

“We encourage people to take personal loans. We encourage people to spend money that they don’t have,” he said.

And he challenged other payroll software vendors to develop similar services.

“Other payroll companies could create these features as well,” he said, which could help payday lenders shut down.

“If we all offer it, then we can do it,” he said.

He encouraged business owners to think about the benefits to their business, including less stress for their workers.

PaySauce Managing Director and Co-Founder Asantha Wijeyeratne said: “People are sometimes strapped financially, but leading them to predatory payday lenders can be disastrous for them, their families and their employers. Just one payment. defaulted and they may be stuck in spiraling debt.

“It’s especially crazy when the initial loans are often less than the amount of money an employee has already earned during that payroll cycle. You shouldn’t be paying more than 500% to access the money you have already won. “

Barnes said, “As a payroll software provider, PaySauce is well positioned to help employers support all workers who need a little bit of transition funding between paydays.

“We know that by working with companies across the country, employers want to do the right thing for their employees, and this service can potentially make a big difference in the lives of workers and their families.”

Trade Minister Kris Faafoi appears poised to introduce new laws that would reduce the amount high-cost lenders could earn to 100% of every loan, including fees and charges.

Trade Minister Kris Faafoi speaks at the Financial Services Federation conference after unveiling his plan to phase out irresponsible lending.

PROVIDED

Trade Minister Kris Faafoi speaks at the Federation of Financial Services conference after unveiling his plan to eliminate irresponsible lending.

This could make payday loans unprofitable and lead to bankruptcy of payday lenders. The laws aren’t expected to go into effect until next year, leaving Barnes impatient.

“Why are we giving payday lenders this breathing space? We will just have more families affected by these activities.”


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