Pay On Demand Apps: How Do They Work?


Millions of Australians live from paycheck to paycheck, but a new generation of apps offers a stopgap solution.

If you’ve ever lived on rice and tinned tuna before payday, an advance pay app or pay on demand service can help you get more groceries and donations to stop buying from mercury poisoning .

But with slogans like “If life happens, why wait until payday?” Consumer advocates are concerned that prepaid apps may encourage overspending and lead consumers into debt.

In this article we cover:

What is Pay on Demand?

Pay-on-demand services, or pay advance apps, essentially provide some type of short-term loan that allows you to access a portion of your paycheck to cover unexpected expenses ahead of payday.

Pay-on-demand apps have hit the global market in the past few years but have only recently hit the Australian coast as a by-product of payday loans and the booming Buy Now, Pay Later (BNPL) sector.

Compare pay-on-demand providers in Australia

CommBank AdvancePay

$ 300 – $ 5,000 * (* subject to approval)

Most customers access $ 300- $ 1,000

  • $ 5 for amounts between $ 300- $ 500

  • $ 10 for amounts between $ 501 and $ 1,000

  • $ 15 for amounts between $ 1,001 and $ 1,500

  • $ 20 for amounts between $ 1,501 and $ 2,000

  • $ 25 for amounts between $ 2,001 and $ 2,500

  • $ 30 for amounts between $ 2,501 and $ 3,000

  • $ 35 for amounts between $ 3,001 and $ 3,500

  • $ 40 for amounts between $ 4,001 and $ 4,500

  • $ 50 for amounts between $ 4,501 and $ 5,000


Up to $ 1,000

5% fixed transaction fee


Up to 25% of your salary up to $ 1,250

5% fee


Up to 25% of your salary up to $ 350

5% fee


Up to 50% of your salary up to a maximum of $ 250

Flat fee from $ 2

To earn

Part of your wages agreed by your employer

The fees are paid by your employer and no interest is charged


Up to $ 500

$ 5 per fortnight

Wage payment

Up to 25% of your salary

5% flat fee and 25% interest pa

Wages tap

Up to $ 100

5% fee


$ 100- $ 500

$ 5 flat fee

How do pay-on-demand apps work?

Most pay-on-demand services work through an app that is directly linked to your bank account or employer. The app then does some quick artificial intelligence calculations to find out how much money you can withdraw based on your income. You can then request the withdrawal of the amount you are entitled to and receive the money almost instantly. The money paid will then be paid back automatically as soon as your employer pays you on the next payday.

To use Paid Services, you must be employed and have an income that meets the stated minimum income and, in general, must not have an irregular pay cycle, rely solely on Centrelink benefits, or have a gambling problem.

It can take up to two business days for the money to arrive in your bank account from some wage advance apps and employer-offered pay-on-demand services, but others can provide the money immediately.

Types of Pay on Demand Apps in Australia

In fact, there are three different types of wage advances in Australia: third-party apps, wage advances offered by your employer, and wage advances offered by banks.

Third party apps

Pay-on-demand apps (like BeforePay and MyPayNow) are third-party apps that connect directly to your bank account and charge a flat fee (usually 5%) from those who use the app to get early access to their pay. Third-party pay-on-demand apps don’t need to contact your employer. Payments are processed instantly, but it can take up to two working days to reach your bank account.

Pay on demand services offered by your employer

Employer pay-on-demand services (such as Earnd by Wagestream or InstaPay by Employment Hero) are offered by your employer or organization and coordinated by the payroll department at your place of work. The services offered by employers usually have an app that employees can use to check what they have earned. Check with your employer to see if they offer this service. Any withdrawals made will be automatically deducted from your final salary before it is paid out to you.

Pay-on-demand services offered by banks.

Bank transfer services (such as CommBank AdvancePay) are offered through your bank through an app, which means that you must be a customer of the bank to access the service. If the withdrawn amount is not paid back in full after your payday arrives, your account will be considered overdrawn and interest may be charged on overdrafts. You typically need to be two days or more away from your next payment date and payments will be processed immediately. There is no need to contact your employer.

Advantages and disadvantages of pay-on-demand apps

Pay advance apps can be cheaper than payday loans

Advertising slogans like “If life happens, why wait until payday?” can encourage overspending and lead consumers into the debt trap

Pay advance apps are usually easy to apply for

Can be more expensive than buy now, pay later (BNPL)

Credit checks are usually not required

Can also be more expensive than a personal loan if the repayment is not made (e.g. CommBank AdvancePay charges an interest rate of 14.90% pa on overdrafts).

The dangers of pay-on-demand apps

Pay-on-demand apps are just beginning to take off in Australia, but consumer advocates are already calling for crackdowns.

Katherine Temple, director of politics and campaigns at the Consumer Action Law Center, said there needs to be more regulation on advance pay apps, which she believes are at the forefront of potential harm with payday loans.

“In that regard, advance pay apps are not subject to the same rules as payday lenders, which means they run even fewer checks to ensure people can afford repayments,” Ms. Temple told

“Regulation has not caught up with the many new companies in this area. We need reforms to ensure that these new actors fall under the existing consumer protection laws that help make credit affordable for people.

“These lenders are exploiting a loophole in our existing laws and that loophole needs to be closed.”

While wage advance apps are meant to cover important expenses like groceries or unplanned bills when you don’t have enough cash to make it through payday, Ms. Temple says they are marketed to encourage people to spend money, that they don’t have.

“These advance pay apps use nifty marketing to make their product seem relatively harmless, but in reality this is a new form of short-term lending aimed at people who live on paychecks to pay checks,” she said.

“These products could cause significant financial harm to people, especially as they don’t do affordability checks.”


What is the difference between a pay-on-demand app and a payday loan?

You will be forgiven for thinking that pay-on-demand and payday loans are pretty similar (after all, they both have the word pay in their name), but there are a few key differences.

Payday loan allows you to borrow small amounts of money (usually up to $ 2,000, although some payday lenders allow amounts up to $ 5,000) that must be repaid within a certain period of time, which can be as little as 16 days or 12 months. The repayment is made according to your payday (hence the name payday loan) as a direct deposit from your designated bank account.

Like advance wages, payday loans are used by people who are short of cash and desperately need cash before their next payday. However, payday loans are notorious for being extremely expensive forms of financing, with most payday loans having interest rates of around 20% and monthly maintenance fees of 4%. In comparison, prepayment services have fairly low fees (usually a 5% fixed fee per transaction).

Payday loans are also better suited for larger unexpected expenses, as payday lenders have loans of up to $ 5,000 or even $ 10,000 – compared to advance payment services, where you can only access a certain amount of money depending on how much you’re making. Pay advance apps are better than payday loans when you need to borrow for a short period of time (e.g. 14 days or a month – depending on how often you get paid).

The two cents from

It’s easy to see why some people might be tempted to use one-time wage advance apps when it’s a week before payday and you get an unexpected bill or can’t afford to get groceries. Compared to other short-term financing options such as the payday loan or the personal loan, advance wage payments are usually cheaper (provided you make the repayment on time). Plus, technically it’s YOUR money that you can access with advance pay apps anyway.

However, it’s important that you don’t get into the habit of using sick pay apps just because you don’t want to wait until payday to buy something want (as opposed to something you to need), like festival tickets or a new outfit to go to the clubs on the weekend. With the advent of Buy Now, Pay Later, and sick pay apps, we are attracting a generation of young people who are used to instant gratification and unfamiliar with the concept of waiting to save.

At the end of the day, getting paid wages early is a very lucrative concept and a smart business idea, but it ultimately obscures the fact that wage advance apps are just another loan product.

Photo by Andrea Piacquadio from Pexels


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