Hundreds of millions of smartphone toting consumers have become accustomed to instant gratification where “I see it. I want it” can be achieved without even having to pull out a credit card or sign your name. Yet while services like PayPal and Apple Pay make payments more and more invisible, the need for consumer management of their funds remains crystal clear. Sure, the guy in front of me at Starbucks was annoyed when he couldn’t just flash his smartphone to get his coffee because the amount he had loaded on his prepaid card had been consumed. Imagine his grief when he had to dig in his pockets for cash to capture his morning brew.

Small dollars, as the expression goes.

What about higher recurring dollar purchases like car payments, utilities and rent, where credit and debit options are fewer and far between from lenders who don’t want to be left out in the cold. Auto-pay options for these services typically rely on the consumer to make sure they have sufficient funds in their bank account when bills are due. For consumers adept at money management, that works out fine. For millions of consumers with lower credit scores, the cost of these auto-pay options can be expensive, especially on occasions when hidden fees are charged for insufficient funds on the date of scheduled pulls, which can occur for reasons beyond a consumer’s control like holidays that can cause a deposit to an individual’s bank account to appear a day later than expected. In these instances, consumers are hit with penalties in the world of “gotcha finance” where fees for insufficient funds and bounced transactions are seen as profit centers by banks and lenders. The penalties for even the most responsible consumers can be onerous and frustrating. Take for example the fee for a single bounced auto-pay which can be as high as $35 to $50 from both the bank and the service provider waiting to be paid; adding as much as $100 to monthly expenses can take a big bite out of a family's grocery budget or their ability to put healthy food on the table.

By providing ‘first dibs’ to the portion of the consumer’s paycheck required to cover major financial obligations, payroll based services are gaining momentum in eliminating  punitive fees and presumed payment risk associated with serving individuals with less than optimal credit. Although that may sound a little like giving up control for consumers with less to give, the reality is quite the opposite.

To incentivize lower credit consumers to opt into to payroll based services, some lenders actually offer deep discounts with rent from payroll programs as a perfect example. Once identified from resident screening as a higher credit risk, rental applicants are offered the option of a significantly reduced security deposit in exchange for scheduling pay period deposits of a portion of rent from their employer payroll through an independent rent from payroll provider; four deposits a month for people who receive weekly paychecks, two deposits a month for people who receive by-monthly paychecks and so on. With security deposits averaging 1 to 1.5 months rent for many lower credit consumers – even for individuals who earn $50,000 or above – the ability to keep that much money in their pocket is attractive. (Worth noting: recent reports suggest that same $50,000 earner probably has less than $3,000 in saving in the event of an unexpected emergency, so hanging onto cash is a real priority.) Will the guy who uses his PayPal or Apple Pay account someday be able to pay his rent from payroll with one swipe on his smartphone? Only time with tell as lenders and consumers get more accustomed to scheduled budgeting through payroll. The future could be very close indeed.