Dive Brief:
- Sears Holdings has teamed up with mobile payroll app provider Activehours to integrate its Shop Your Way rewards program into the Activehours mobile paycheck advance application, allowing members as well as Sears and Kmart associates to access their accrued pay before their paycheck arrives.
- When Shop Your Way members and Sears Holdings associates access their pay through Activehours, they will receive Shop Your Way points which may be redeemed online or in-store at Sears and Kmart. Existing Shop Your Way members can immediately link their accounts to the Activehours app.
- “This partnership allows us to make a difference in our members’ financial lives by providing instant access to their pay the day they’ve earned it," said Terry Rolecek, president of Shop Your Way Financial Services for Sears Holdings. "By integrating the Shop Your Way program with Activehours, we provide our members with the convenience of purchasing products and services when they need them rather than having to wait for a paycheck which has already been earned.”
Dive Insight:
Activehours received some criticism back in 2014 not long after it launched because of its seeming similarities to payday advance loans. However, the app doesn't charge massive interest as those loans do. Instead, it asks users taking advances on their paychecks to voluntarily tip the service. Activehours also positions its mission as helping workers gain access to pay the day that they have put in the hours to earn it, rather than having to wait several days or two weeks later for a lump sum.
Does that make it a responsible and sound option for the Shop Your Way members and employees of Sears and Kmart who would now use the app to obtain advances on upcoming paychecks? Well, the app only allows users to get paid early on a portion of their paychecks, not the entire check, and there are daily limits on advance amounts, so there are at least stopgaps in that sense. Some observers early on also noted that many people likely would seek advances through an app like this only to avoid small overdrafts on checking accounts.
Overall, Activehours' service doesn't seem much like a shady payday loan operation at all, though of course workers that use it will find less money in their paychecks on payday, a seemingly obvious detail that some users nevertheless may not realize right away. Sears arguably has some obligation to explain in full and in detail what Activehours is and how it works, and that people who use the app are essentially obtaining short-term loans from themselves. Instead Sears hedged a bit in its press release announcing the integration, avoiding terminology such as "loans" and "paycheck advances."
Aside from all this (and from a purely opportunistic point of view), this seems like a decent idea for growing Shop Your Way participation, and increasing the likelihood that program members and Sears Holdings employees that take advantage of the integration will redeem more points more frequently at their stores. Sears may or may not have a bankruptcy filing in its near future, but it has in any case tried to make Shop Your Way a key pillar in its turnaround attempt, recently promising more holiday shopping perks for program members, and also aligning with Uber to pick up more membership among Uber drivers.
